US factory activity in 1st expansion since Sept 2022

Economic activity in the US manufacturing sector expanded in March for the time since September 2022, on positive demand and stronger output.

The manufacturing purchasing managers' index (PMI) rose to 50.3 in March, up from the 47.8 recorded in February, according to the Institute for Supply Management's (ISM) monthly survey. The 12-month average was 47.5. Readings above 50 signal growth while those below that level signify contraction.

The new orders index rose by 2.2 percentage points to 51.4, while the production index surged 6.2 points to 54.6. The prices index rose by 3.3 points to 55.8 in March. Export orders were unchanged at 51.6, in expansion territory. The suppliers' delivery index edged down to 49.9, signaling slower deliveries, which is typical as the economy improves.

The stronger-than-expected PMI survey adds to other recent data, including job growth, consumer spending and stronger-than-initially estimated GDP growth, that shows the economy outperforming expectations. This adds pressure on Federal Reserve policymakers to hold back on beginning to cut borrowing costs after raising them to the highest in 23 years to rein in inflation.

"Demand remains at the early stages of recovery, with clear signs of improving conditions," ISM said. "Production execution surged compared to January and February, as panelists' companies reenter expansion. Suppliers continue to have capacity but are showing signs of struggling, due in large part to their raw material supply chains."

By Bob Willis