Manufacturing Marches On

Don Hogsett, Staff Staff, April 11, 2005

Tempe, Ariz. — Still cooling off from its strong pace during the back half of 2004, manufacturing activity continued to expand during March, but at the slowest pace in six months, since last October, the nation's purchasing managers reported.

In a widely watched report on this key driver of the U.S. economy, The Institute for Supply Management (ISM) said its bellwether gauge slipped 0.1 percentage point to a reading of 55.2 percent. The March reading is now down 2.4 percentage points from a recent high of 57.6 percent recorded in November; and off even further, 7.4 percentage points, from a year-ago reading of 62.6.

While growing at a slower pace, “The manufacturing sector maintained its strength in March, finishing the first quarter in a relatively strong position,” said Norbert Ore, chairman of the ISM's Business Survey Committee. “Growth in new orders and inventories helped offset lower index reading in production, supplier deliveries and employment,” Ore added. On a persistently problematic note, Ore noted that price inflation continues to vex American manufacturers, with the Prices Index shooting up 7.5 percentage points during March to a level of 73 from 65.5. “Price inflation continues to present a problem for manufacturers as the Prices Index gained significant momentum,” he said.

On a more bullish note, new orders ticked up 1.3 percentage points to a level of 57.1. Order backlogs grew as well, rising 5.5 percentage points, to a level of 56.

March snapshot
Manufacturing benchmarks
Month-over-month percentage-point change

Source: Institute for Supply Management
Purchasing Managers' Index -0.5%
New Orders +1.3
Production -0.2
Employment -4.1
Inventories +5.5
Customers' Inventories +3.5
Prices Manufacturers Pay +7.5
Order Backlogs +5.5
Export Orders -2.0
Imports -1.8

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