In March, economic activity in the manufacturing sector expanded for the fourth consecutive month, and the overall economy grew for the 46th consecutive month, according to the Institute for Supply Management.
“It is clear that manufacturing activity surged this winter, but now that spring has arrived, the reality that there are many headwinds this year is starting to constrain the pace of growth, “ said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation (MAPI). “Consumers faced higher payroll taxes, gasoline prices rose, and wage and salary increases barely exceed the inflation rate. Firms could pick up the pace of investment spending but the budget battles in Washington, where austerity and sequestration are the main issues, have created enough uncertainty to keep a lid on new investments."
The New Orders Index registered 51.4% in March, a decrease of 6.4 percentage points when compared to the February reading of 57.8%, representing growth in new orders for the third consecutive month.
The Employment Index registered 54.2% in March, which is 1.6 percentage points higher than the 52.6% reported in February. This month's reading indicates growth in employment for the 42nd consecutive month.
ISM's Imports Index had the same reading, 54%, in March as it did in February. The reading indicates that import levels are growing for the third time in the past four months.
And the Export Orders Index registered 56% in March, which is 2.5 percentage points higher than the 53.5% reported in February.
“The ISM index for exports did pick up in March,” Meckstroth added, “but it is hard to believe that net exports are driving manufacturing growth when Europe and Japan are in recession and China is just starting to accelerate after a growth slowdown last year. MAPI predicts that manufacturing production will perform only slightly better than overall GDP growth this year. Manufacturing industrial production is forecast to increase 2.2% in 2013 and accelerate to 3.6% growth in 2014.”