US March ISM manufacturing PMI edges back

Manufacturing activity in the States cooled a little in March as firms eased back a tad on the rate of production level increases, but according to economists the report showed strength across its major subcomponents.

The Institute for Supply Management's manufacturing sector gauge slipped from a reading of 57.7 for the month of February to 57.2 for March.

Economists had projected a reading of 57.0.

The 50.0-point level marked the threshhold between expansion and contraction for the headline index and subindices, with levels above and below that denoting successively quicker paces of growth or contraction.

A gauge of companies' output levels slipped from 62.9 to 57.6, while the key new orders subindex retreated from 65.1 to 64.5 and another linked to the prices paid by firms rose from 68.0 to 70.5.

The subindex linked to hiring posted a strong rise, improving from 54.2 to 58.9.

New export orders were also on the up, with the corresponding subindex improving from 55.0 to 59.0, "suggesting some more momentum from external demand and improved export prospects for manufacturing firms," according to Blerina Uruci at Barclays Research.

Based on its historical relationship to the economy, readings for the headline index between January and March were consistent with a rate of growth in US gross domestic product of 4.3%, the ISM said.

"This morning’s report is consistent with other recent surveys on manufacturing activity, highlighting strong momentum since the presidential elections last November. However, this has not translated into an acceleration in manufacturing output of the same scale.

"[...] We expect the recent gains in the hard data to be maintained this year and for healthier production to support manufacturing employment. Having said that, the strong survey data imply upside risks to our view for a moderate manufacturing recovery," Uruci said.