Sam Moqadam/Unsplash
Factory Worker Man Orange Cyan Vest Framed Photo By Sam Moqadam On Unsplash

US Manufacturing Employment, New Orders Indexes Fall to Decade Lows

April 1, 2020
The Institute for Supply Management’s main index fell slightly as workforce numbers contracted to lows not seen since 2009.

The Institute for Supply Management’s manufacturing PMI for March was 49.1%, one percentage point lower than it was in February. But that number belies the bigger picture of an industry wracked by the coronavirus pandemic. New orders, production, employment, prices, exports and imports all contracted, according to the Manufacturing ISM Report On Business.

The index measuring employment in the sector contracted for the eighth month in a row, to 43.8% from 46.9%, and at a faster rate this month than before. 43.8% represents the employment index’s worst reading since May 2009. Only 3 of 18 industry sectors surveyed reported an increase in employment: printing and related support activities, food and beverage companies, and electronics.

Supply chains snarled by coronavirus chaos continued to confound manufacturers. The ISM’s index on supplier deliveries, which records less-than 50 scores on this index as accelerating deliveries and scores above 50 as slowing, grew from 57.3% to 65%, extending the trend for a fifth month.

New orders contracted 7.6 percentage points from 49.8% in February to 42.2% in March, an 11-year low compared to March 2009, when the index recorded 41.3%. A respondent from the Plastics and Rubber Products sector said that all of their North American manufacturing plants had ceased operations or dramatically scaled them back. Another executive, this one from a nonmetallic mineral products company, noted that a large part of their business was the hospitality industry.

“We are seeing demand drop and an increase in cancellations,” they reported. The coronavirus impact has trampled demand for travel and leisure industries, including hotels and airlines.

Not every sector felt the blow, however, as some manufacturers whose goods support people spending much more time at home found: “We are experiencing a record number of orders due to COVID-19,” said a surveyed executive of the food, beverage, and tobacco sector.

In general, the dearth of new orders for factories sent aftershocks through other metrics. As no new orders came in, factories had little to do, and the ISM’s factory production index slid 2.6 points to 47.7% in March. One surveyed executive in the machinery sector said COVID-19 was to blame for a “30% reduction in productivity” in their factory. Factory backlogs shrank, and the ISM’s backlog index fell 4.4 points to 45.9%.

Factories imported and exported less goods in March, and both the new export orders and imports indexes fell. Exports fell 4.6 points to 46.6%, while imports fell a mere 0.5 points to 42.6%, representing a contraction that is very slowly speeding up.

Popular Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!