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US' manufacturing PMI declines slightly in March 2024: S&P Global

03 Apr '24
3 min read
Pic: Adobe Stock
Pic: Adobe Stock


  • In March 2024, the US' manufacturing PMI remained above 50 for the third month, indicating ongoing sector improvement despite a slight decline to 51.9.
  • Production and new orders rose, driven by stronger demand, though growth moderated compared to February 2024.
  • Employment increased, while firms reduced inventory and purchasing activities.
For the third consecutive month in March, US’ seasonally adjusted manufacturing purchasing managers’ index (PMI), recorded above the 50 mark indicating no change, signalled ongoing monthly improvement in the sector's health. The index witnessed a slight decline to 51.9 from February's 52.2, indicating a marginally less significant enhancement as the first quarter concluded.

Manufacturers recorded a solid and accelerated rise in production during March, with the rate of growth the sharpest in almost two years. Respondents mentioned signs of improving demand conditions.

Stronger demand was also evident in data for new orders, which showed an increase for the third month running. The pace of expansion was solid, but softer than that seen in February. Total new orders rose more quickly than new business from abroad, which increased only marginally in March, as per S&P Global.

Firms remained confident that output will increase over the coming year, thanks to expectations for improving economic conditions, marketing efforts and improving capacity.

This confidence in the outlook, allied with recent increases in new orders, encouraged manufacturers to expand their staffing levels in March. Although modest, the pace of job creation was the most pronounced since July last year. Improved operating capacity and a slower expansion of new orders meant that firms were able to deplete backlogs of work modestly. Outstanding business has now decreased on a monthly basis throughout the past year-and-a-half.

While firms took on extra staff at an accelerated pace, they scaled back their purchasing activity in March following a rise in February. Respondents signalled a preference for using existing stocks to help support production rather than purchasing additional inputs.

A desire to draw down stock holdings was evident, with inventories of both purchased items and finished goods decreasing in March after having increased in the previous survey period. Firms indicated that inventory holdings were sufficient to satisfy current requirements, with efforts to improve cash flow also behind the reductions in stocks.

Input costs increased sharply, with the rate of inflation ticking up from that seen in February. Higher oil and raw material costs, plus increased transportation rates, reportedly added to cost burdens at the end of the first quarter.

Meanwhile, the impact of rising labour costs was mentioned as a factor pushing up selling prices at a number of manufacturers. As a result, the rate of output price inflation quickened for the fourth month running to a sharp pace that was the fastest in just under a year.

Finally, suppliers' delivery times shortened for the fourteenth time in the past 15 months, albeit only marginally. Quicker deliveries reportedly reflected a continued normalization of supply chains and sufficient stock holdings at vendors.

Fibre2Fashion News Desk (DP)

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