ISM: Manufacturing Contracts For Fourth Straight Month
“The New Orders Index remained in contraction territo- ry at 47 percent, 4.5 percentage points higher than the fig- ure of 42.5 percent recorded in January. The Production Index reading of 47.3 percent is a 0.7-percentage point decrease compared to January’s figure of 48 percent. The Prices Index registered 51.3 percent, up 6.8 percentage points compared to the January figure of 44.5 percent. “The Backlog of Orders Index registered 45.1 percent, 1.7 percentage points higher than the January reading of 43.4 percent. The Employment Index dropped into con- traction territory, registering 49.1 percent, down 1.5 per- centage points from January’s 50.6 percent. “The Supplier Deliveries Index figure of 45.2 percent is 0.4 percentage point lower than the 45.6 percent re- corded in January; readings from the last three months are the index’s lowest since March 2009 (43.2 percent). The Inventories Index registered 50.1 percent, 0.1 percent- age point lower than the January reading of 50.2 percent.
Economic activity in the manufacturing sector contracted in February for the fourth consecutive month following a 28-month period of growth, say the nation’s supply execu- tives in the latest Manufacturing ISM Report On Business. The report was issued by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manu- facturing Business Survey Committee: “The February Manufacturing PMI registered 47.7 per- cent, 0.3 percentage point higher than the 47.4 percent recorded in January. Regarding the overall economy, this figure indicates a third month of contraction after a 30-month period of expansion. In the last two months, the Manufacturing PMI has been at its lowest levels since May 2020, when it registered 43.5 percent.
The New Export Orders Index reading of 49.9 percent is 0.5 percentage point higher than January’s figure of 49.4 percent. The Imports Index continued in contraction ter- ritory at 49.9 percent, 2.1 percentage points above the January reading of 47.8 percent. “The U.S. manufacturing sector again contracted, with the Manufacturing PMI improving marginally over the previous month. With Business Survey Committee panelists reporting softening new order rates over the previous nine months, the February composite index reading reflects companies continuing to slow outputs to better match demand for the first half of 2023 and prepare for growth in the second half of the year. “Demand eased, with the (1) New Orders Index contracting at a slower rate, (2) New Export Orders Index still below 50 percent but continuing to improve, (3) Customers’ Inventories Index remaining at ‘too low’ lev- els, a positive for future production and (4) Backlog of Orders Index recovering for a third month but in moderate contraction. “Output/Consumption (measured by the Production and Employment indexes) was negative, with a combined 2.2-percentage point downward impact on the Manufactur- ing PMI calculation. The Employment Index returned to contraction after two months of expansion, and the Production Index logged a third month in contraction territory. “Panelists’ companies continue to indi- cate that they will not substantially reduce head counts, as sentiment is positive about the second half of the year, though slightly less so compared to January. Inputs — de-
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10 March 20, 2023
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