Economic activity in the manufacturing sector declined in March for the
eighth consecutive month while the overall economy registered a slight increase
after two months of decline according to the latest figures from the
Manufacturing NAPM Report on Business. The March PMI rose slightly to 43.1%,
above the consensus figure of 42.0, and over the breakeven point of 42.7.
Although the increase above 43% suggests that the economy is no longer
contracting, the figures for the first quarter indicate a significant economic
problems remain. Fed watchers will wait to see if the Federal Reserve takes the
report as a sign of recovery although the Index has remained below 50 since
August.
According to Norbert J. Ore, C.P.M., chair of the National
Association of Purchasing Management's Manufacturing Business Survey Committee
and group director, strategic sourcing and procurement, Georgia-Pacific
Corporation. "The manufacturing sector continued to contract in March. However,
it is encouraging that prices are moderating and there is growth in new export
orders. Other bright spots were Production and Backlog of Orders which, though
still declining, slowed significantly in their rate of decline."
The
production indices all rose in March though they all remain weak, indicating
that the manufacturing sector is still contracting. It also appears that
the sector has undertaken a successful inventory correction. With both New
Orders and Backlog of Orders still below 50%, there is no indication of a quick
improvement in manufacturing activity, however. New Orders grew by 1.5%,
reversing a six month decline. Backlog of Orders failed to grow for the eleventh
consecutive month in March. The Production Index rose in 3.1% in March to 42.8
percent up from 39.7 percent in February. This is the fourth consecutive month,
and sixth in the last eight months, that the index has been below the 50%
mark.
Among other sub-indexes, New Export Orders is the only one
registering above 50 percent, breaking a five month decline for the sector. Only
three of the twenty sub-industries in manufacturing reported growth: chemicals,
instruments and photographic equipment and miscellaneous.
| Series | March | February |
| PMI | 43.1 | 41.9 |
| Production | 42.8 | 39.7 |
| New Orders | 42.3 | 40.8 |
| Backlog of Orders | 43.5 | 37.0 |
| Supplier Deliveries | 48.3 | 51.3 |
| Inventories | 44.2 | 45.7 |
| Employment | 40.4 | 37.2 |
| Prices Paid | 49.9 | 58.1 |
| New Export Orders | 50.6 | 47.6 |
| Imports | 49.1 | 46.5 |
The next NAPM Report on Business will be released on May 1, 2001.
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