The U.S. manufacturing sector grew for the fourth consecutive month in March, according to the Institute of Supply Management’s monthly Report on Business, although at a slower pace than in February.
The ISM’s measurement for manufacturing growth, the PMI, dipped to 51.3 percent in March, a decrease of 2.9 percentage points from February’s level of 54.2 percent. (Any number over 50 indicates expansion; a number below 50 signals contraction.)
“It’s a normal variation,” said Bradley J. Holcomb, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee . “We are very pleased with the overall report, which has shown solid growth since December. All of the fundamentals are solid.”
Electronics was among the 14 industries that grew during March, the ISM reports. Both sub-segments tracked by the ISM: Electrical Equipment, Appliances & Components; and Computer & Electronic Products, increased for the period. Anecdotally, electronics executives are finding the half of 2013 “a mixed bag.”
“I think electronics overall has been under pressure for some time and [March] is a continuation of that trend,” said Holcomb. “The whole industry is undergoing a transformation—with the dominance of Apple, tablets and smartphones—and it is moving away from the desktop. It will take a while for that [change] to work its way through.”
There is evidence that the industry is reducing inventory that was building up toward the end of 2012. Seven manufacturing industries tracked by ISM reported customers' inventories as “too low” during March. The are: Electrical Equipment, Appliances & Components; Transportation Equipment; Computer & Electronic Products; Plastics & Rubber Products; Furniture & Related Products; Fabricated Metal Products; and Apparel, Leather & Allied Products. “We like to see inventories low because that represents there is demand and it’s time for customers to stock up,” Holcomb said.
Overall, Holcomb said, the results demonstrate a continued positive attitude in manufacturing. “If there is a negative, I would say that it is the impact of government spending policies and sequestration,” he said. “But I think it’s way too early to tell the full significance.”
The entire report is available here.
