Tempe, Arizona - Economic activity in the manufacturing sector expanded in March for the eighth consecutive month, and the overall economy grew for the 11th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee. "The manufacturing sector grew for the eighth consecutive month during March. The rate of growth as indicated by the PMI is the fastest since July 2004. Both new orders and production rose above 60 percent this month, closing the first quarter with significant momentum going forward. Although the Employment Index decreased 1 percentage point to 55.1 percent from February's reading of 56.1 percent, signs for employment in the sector continue to improve as the index registered a 10 percent month-over-month improvement, indicating that manufacturers are continuing to fill vacancies. The Inventories Index provided a surprise as it indicated growth for the first time following 46 months of liquidation - perhaps signaling manufacturers' willingness to increase inventories based on expected levels of activity."

Performance By Industry

The 17 manufacturing industries reporting growth in March - listed in order - are: Apparel, Leather & Allied Products; Textile Mills; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Computer & Electronic Products; Paper Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Furniture & Related Products; Nonmetallic Mineral Products; Fabricated Metal Products; Wood Products; Printing & Related Support Activities; Chemical Products; and Primary Metals. Plastics & Rubber Products is the only industry reporting contraction during March.

What Respondents Are Saying ...
- "Certain markets served have increased by 50 percent in new customer orders, while other markets are not as strong." (Miscellaneous Manufacturing)
- "Business levels continue to be strong coming out of the Chinese New Year. First quarter will be our best since 2000." (Machinery)
- "Business is steady and prospects are good for Q2." (Food, Beverage & Tobacco Products)
- "After-market sales are improving as more vehicles require maintenance." (Transportation Equipment)
- "There is a serious shortage of basic electronic components, and lead times are becoming a problem. We are also seeing dramatic price increases." (Computer & Electronic Products)

Commodities reported up/down in price and in short supply

Commodities Up in Price
Aluminum (9); Capacitors; Caustic Soda; Connectors; Copper; Copper Products; Corrugated Containers; Diesel Fuel; Packaging; Paper (2); Plastics (3); Plastic Resins (3); Polyethylene (2); Polyethylene Resins; Polypropylene (4); Scrap Metal; Steel (9); Steel Products (3); and Sulfuric Acid.

Commodities Down in Price
Natural Gas is the only commodity reported down in price.

Commodities in Short Supply
No commodities are reported in short supply.

Note: The number of consecutive months the commodity is listed is indicated after each item.

March 2010 manufacturing index summaries

PMI

Manufacturing continued to grow in March, with the rate of growth accelerating as the PMI registered 59.6 percent, an increase of 3.1 percentage points when compared to February's seasonally adjusted reading of 56.5 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 11th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the eighth consecutive month. Ore stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through March (58.2 percent) corresponds to a 5.4 percent increase in real gross domestic product (GDP). In addition, if the PMI for March is annualized, it corresponds to a 5.9 percent increase in real GDP annually."

New Orders

ISM's New Orders Index registered 61.5 percent in March, 2 percentage points higher than the seasonally adjusted 59.5 percent registered in February. This is the ninth consecutive month of growth in the New Orders Index. A New Orders Index above 50.2 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 13 industries reporting growth in new orders in March - listed in order - are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Paper Products; Primary Metals; Textile Mills; Food, Beverage & Tobacco Products; Furniture & Related Products; Computer & Electronic Products; Fabricated Metal Products; Machinery; Chemical Products; Transportation Equipment; and Miscellaneous Manufacturing. Plastics & Rubber Products is the only industry reporting a decrease in new orders in March.

Production

ISM's Production Index registered 61.1 percent in March, which is an increase of 2.7 percentage points from the February reading of 58.4 percent (seasonally adjusted). An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. This is the 10th consecutive month the Production Index has registered above 50 percent.

The 12 industries reporting growth in production during the month of March - listed in order - are: Apparel, Leather & Allied Products; Textile Mills; Wood Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Furniture & Related Products; Food, Beverage & Tobacco Products; Primary Metals; Computer & Electronic Products; and Fabricated Metal Products. The two industries reporting a decrease in production are: Paper Products; and Plastics & Rubber Products.

Employment

ISM's Employment Index registered 55.1 percent in March, which is 1 percentage point lower than the seasonally adjusted 56.1 percent reported in February. This is the fourth consecutive month of growth in manufacturing employment. An Employment Index above 49.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Thirteen of the 18 manufacturing industries reported growth in employment in March in the following order: Textile Mills; Apparel, Leather & Allied Products; Paper Products; Machinery; Miscellaneous Manufacturing; Printing & Related Support Activities; Nonmetallic Mineral Products; Primary Metals; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Chemical Products; Computer & Electronic Products; and Transportation Equipment. The two industries that reported decreases in employment during March are: Plastics & Rubber Products; and Fabricated Metal Products.

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in March as the Supplier Deliveries Index registered 64.9 percent, which is 3.8 percentage points higher than the 61.1 percent registered in February (seasonally adjusted). This is the 10th consecutive month the Supplier Deliveries Index has been above 50 percent. A reading above 50 percent indicates slower deliveries.

The 14 industries reporting slower supplier deliveries in March - listed in order - are: Petroleum & Coal Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Textile Mills; Apparel, Leather & Allied Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Transportation Equipment; Furniture & Related Products; Machinery; Printing & Related Support Activities; Paper Products; and Chemical Products. There were no industry reports of faster deliveries.

Inventories

Manufacturers' inventories expanded in March following 46 months of contraction, as the Inventories Index registered 55.3 percent. The index is 8 percentage points higher than the seasonally adjusted February reading of 47.3 percent. An Inventories Index greater than 42.6 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The 10 industries reporting higher inventories in March - listed in order - are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Transportation Equipment; Computer & Electronic Products; Machinery; Paper Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Chemical Products; and Fabricated Metal Products. The three industries that reported decreases in inventories in March are: Primary Metals; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components.

Customers' Inventories*

The ISM Customers' Inventories Index registered 39 percent in March, 2 percentage points higher than in February when the index registered 37 percent, and the 12th consecutive month the Customers' Inventories Index has been below 50 percent. The index indicates that respondents believe their customers' inventories are too low at this time.

There were no industry reports of customers' inventories being too high during March. The 12 industries reporting customers' inventories as too low during March - listed in order - are: Electrical Equipment, Appliances & Components; Machinery; Wood Products; Primary Metals; Computer & Electronic Products; Paper Products; Printing & Related Support Activities; Transportation Equipment; Food, Beverage & Tobacco Products; Chemical Products; Fabricated Metal Products; and Miscellaneous Manufacturing.

Prices

The ISM Prices Index registered 75 percent in March, 8 percentage points higher than the 67 percent reported in February. This is the ninth consecutive month in which the Prices Index has registered above 50 percent. While 53 percent of respondents reported paying higher prices and 3 percent reported paying lower prices, 44 percent of supply executives reported paying the same prices as in February. A Prices Index above 49.3 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.

The 17 industries reporting paying increased prices during the month of March - listed in order - are: Petroleum & Coal Products; Plastics & Rubber Products; Paper Products; Primary Metals; Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Machinery; Textile Mills; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Transportation Equipment; Computer & Electronic Products; Food, Beverage & Tobacco Products; Furniture & Related Products; and Chemical Products. There were no industry reports of paying lower prices on average during March.

Backlog of Orders

ISM's Backlog of Orders Index registered 58 percent in March, 3 percentage points lower than the 61 percent reported in February. Of the 84 percent of respondents who reported their backlog of orders, 30 percent reported greater backlogs, 14 percent reported smaller backlogs, and 56 percent reported no change from February.

The 10 industries reporting increased order backlogs in March - listed in order - are: Apparel, Leather & Allied Products; Paper Products; Nonmetallic Mineral Products; Primary Metals; Food, Beverage & Tobacco Products; Computer & Electronic Products; Fabricated Metal Products; Chemical Products; Transportation Equipment; and Electrical Equipment, Appliances & Components. The two industries that reported decreases in order backlogs during March are: Petroleum & Coal Products; and Plastics & Rubber Products.

New Export Orders*

ISM's New Export Orders Index registered 61.5 percent in March, 5 percentage points higher than the 56.5 percent reported in February. This is the ninth consecutive month of growth in the New Export Orders Index.

The 10 industries reporting growth in new export orders in March - listed in order - are: Apparel, Leather & Allied Products; Paper Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Chemical Products; Fabricated Metal Products; Transportation Equipment; Computer & Electronic Products; and Miscellaneous Manufacturing. The only two industries reporting decreases in new export orders during March are: Primary Metals; and Plastics & Rubber Products.

Imports*

Imports of materials by manufacturers expanded in March as the Imports Index registered 57 percent, 1 percentage point higher than the 56 percent reported in February. This is the seventh consecutive month of growth in imports.

The eight industries reporting growth in imports during the month of March - listed in order - are: Apparel, Leather & Allied Products; Transportation Equipment; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Chemical Products; Machinery; and Fabricated Metal Products. The two industries reporting a decrease in imports during March are: Primary Metals; and Computer & Electronic Products.

Buying Policy

Average commitment lead time for Capital Expenditures decreased 2 days to 116 days. Average lead time for Production Materials decreased 5 days to 45 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased 1 day to 23 days.