Economic activity in the U.S. manufacturing sector expanded in March for the third consecutive month, according to data compiled from the nation’s supply executives in the latest ISM Manufacturing PMI Report.

The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.

“The Manufacturing PMI registered 52.7 percent in March, a 0.3-percentage point increase compared to the reading of 52.4 percent in February,” shared Susan Spence, MBA, and chair of the ISM Manufacturing Business Survey Committee. “The overall economy continued in expansion for the 17th month in a row.”

Spence noted that above 47.5 percent, over time, generally indicates an expansion of the overall economy. Her summary of the latest report indicates that:

  • The New Orders Index expanded for the third straight month after four straight readings in contraction, registering 53.5 percent, down 2.3 percentage points compared to February’s figure of 55.8 percent.
  • The March reading of the Production Index (55.1 percent) is 1.6 percentage points higher than February’s reading of 53.5 percent.
  • The Prices Index remained in expansion (or ‘increasing’ territory), registering 78.3 percent, a 7.8-percentage point jump from February’s reading of 70.5 percent.
  • The Prices Index has increased 19.3 percentage points over the last two months, to reach its highest level since a reading of 78.5 percent in June 2022.
  • The Backlog of Orders Index registered 54.4 percent, down 2.2 percentage points compared to the 56.6 percent recorded in February.
  • The Employment Index registered 48.7 percent, down 0.1 percentage point from February’s figure of 48.7 percent,” says Spence.

“The Supplier Deliveries Index indicated a further slowing for the fourth month in a row after one month in ‘faster’ territory,” Spence continued. “The reading of 58.9 percent is up 3.8 percentage points from the 55.1 percent recorded in February. (Supplier Deliveries is the only ISM PMI Reports index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Inventories Index registered 47.1 percent, down 1.7 percentage points compared to February’s reading of 48.8 percent. The Customers’ Inventories Index reading of 40.1 percent is a 1.3-percentage point increase compared to February.

“The New Export Orders Index reading of 49.9 percent is 0.4 percentage point lower than the reading of 50.3 percent registered in February and marks a return of this subindex to contraction territory. The Imports Index registered 52.6 percent, 2.3 percentage points lower than February’s reading of 54.9 percent.”

“In March, U.S. manufacturing activity remained in expansion territory, growing at a slightly faster pace than the month before, Spence said. “Of the five subindexes that make up the PMI, the New Orders Index indicated slower growth compared to the previous month, the Production Index grew at a faster rate, and the Employment and Inventories indexes remained in contraction. This month also marks the first report with panelists citing the Iran war as a new impact to their business, along with ongoing uncertainty with U.S. economic policy, despite the recent Supreme Court ruling striking down International Emergency Economic Powers Act (IEEPA) tariffs.”

Spence reported that 64 percent of comments overall were negative in March. Among the negative comments, about 20 percent cited tariffs and about 40 percent the war in the Middle East. Some panelists referenced both topics within a single comment or in mixed sentiment.

“Two demand indicators – the New Orders and Backlog of Orders indexes – are in expansion, the New Export Orders Index returned to contraction, and the Customers’ Inventories Index remains in ‘too low’ territory, contracting at a slightly slower rate.

She said a ‘too low’ status for the Customers’ Inventories Index is usually considered positive for future production. It makes sense if the supply chain is working to keep the pipeline full. That measurement may be seen in a different light during a weak consumer demand period.

Turning to output, Spence noted that the Production Index is in expansion for the fifth month in a row, and the Employment Index decreased by 10 basis points and remains in contraction.

“Among panelists, 55 percent indicated that managing head counts remains the norm at their companies, as opposed to hiring,” she highlighted.

Inputs, combined from the supplier deliveries, inventories, prices and imports indices, had mixed results.

“The Supplier Deliveries Index indicated increasingly slowing deliveries, the Inventories Index contracted at a faster rate, and the Prices Index took another big leap to 78.3 percent, from 70.5 percent in February. The Imports Index lost 2.3 percentage points for a reading of 52.6 percent, compared to 54.9 percent in February,” Spence observed.

“Looking at the manufacturing economy, 16 percent of the sector’s gross domestic product (GDP) contracted in March, compared to 21 percent in February, and the percentage of manufacturing GDP in strong contraction (defined as a composite PMI of 45 percent or lower) increased to 4 percent, compared to 1 percent in February. The share of sector GDP with a PMI at or below 45 percent is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, four (Transportation Equipment; Computer & Electronic Products; Machinery; and Chemical Products) expanded in March,” said Spence.

The 13 manufacturing industries reporting growth in November included:

  1. Chemical Products
  2. Computer & Electronic Products
  3. Electrical Equipment, Appliances & Components
  4. Fabricated Metal Products
  5. Machinery
  6. Miscellaneous Manufacturing
  7. Non-Metallic Mineral Products
  8. Paper Products
  9. Primary Metals
  10. Printing & Related Support Activities
  11. Textile Mills
  12. Transportation Equipment
  13. Wood Products

The three industries reporting contraction in November were:

  1. Food, Beverage & Tobacco Products.
  2. Furniture & Related Products
  3. Plastics & Rubber Products

Survey Respondents Share Feedback

  • “This is expected to be a transition year for the U.S. trucking market, with gradual stabilization driven by capacity tightening and replacement demand instead of growth. Demand should stay constrained by weak carrier profitability and high equipment costs but improve modestly late in the year.” [Transportation Equipment]
  • “Changes in the tariff structure are bringing cautious opportunities to offset significant costs for the balance of 2026. The actions in Iran, however, add a new wrinkle to energy costs throughout the world, including India. We continue to try and plan for the unpredictable and unexpected.” [Transportation Equipment]
  • “We’re seeing steady increases in activity, but geopolitical issues and the Iran war are already waning sentiment.” [Fabricated Metal Products]
  • “Customer orders have increased considerably as the construction market remains strong, resulting in higher production volume and increased forecasts to suppliers.” [Machinery]
  • “Current Middle East unrest is already starting to impact business operations by increasing lead times, costs, container delays and the like.” [Food, Beverage & Tobacco Products]
  • “Lots of relief from the Supreme Court striking down (emergency) tariffs, particularly with organic cane sugar from Brazil.” [Food, Beverage & Tobacco Products]
  • “Geopolitical tensions related to the conflict in Iran are contributing to rising manufacturing supply costs, and ongoing tariff uncertainty is negatively impacting purchasing strategies and cost forecasts.” [Chemical Products]
  • “Ongoing geopolitical instability has emerged as a persistent factor influencing global trade dynamics. We anticipate strategic realignment of supply chains as organizations respond to energy market volatility and shifting trade policies. In light of these macroeconomic headwinds, we — like most organizations — are maintaining a cautious posture regarding investment commitments while continuing to monitor market conditions closely. Our purchasing strategy is being recalibrated to address supply chain vulnerabilities exposed by energy market volatility and evolving trade protectionism.” [Chemical Products]
  • “Metal commodity prices continue to put pressure on mechanical commodities. Memory price escalation is causing large cost increases that cannot be mitigated in other areas of the product cost.” [Computer & Electronic Products]
  • “The Middle East war has created domestic and global turmoil for the olefins and polyolefins business. Feedstocks and finished product pricing are accelerating dramatically as Middle Eastern and Asian producers suffer from shipping blockages. Global customers for packaging resins are scrambling to cover needs from North America and South America in the face of supply chain complications.” [Plastics & Rubber Products]

Commodity Pricing Changes and Short Supply Issues

Commodities Up in Price
Aluminum (28); Chemical Products; Cooking Fats; Copper (9); Copper Based Products (4); Corn; Diesel Fuel; Electronic Components (3); Freight; Fuel; Memory Components; Methanol; Natural Gas (2); Plastics; Polypropylene (2); Precious Metals (3); Resins (2); Soybean Products; Steel (5); Steel — Hot Rolled (3); Steel — Stainless (2); Steel Products (4); Titanium Dioxide; and Tungsten Products (2).

Commodities Down in Price
None.

Commodities in Short Supply
Bearing Components; Electrical Components (9); Electronic Components (13); Memory (3); Rare Earth Components (5); and Semiconductors.

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

Methodology: “The ISM Manufacturing PMI Report is based on data compiled from purchasing and supply executives nationwide. The composition of the Manufacturing Business Survey Panel is stratified according to the North American Industry Classification System (NAICS) and each of the following NAICS-based industries’ contribution to gross domestic product (GDP): Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies). The data are weighted based on each industry’s contribution to GDP. According to U.S. Bureau of Economic Analysis (BEA) estimates (the average of the fourth quarter 2023 GDP estimate and the GDP estimates for first, second, and third quarter 2024, as released on December 19, 2024), the six largest manufacturing industries are: Chemical Products; Transportation Equipment; Computer & Electronic Products; Food, Beverage & Tobacco Products; Machinery; and Petroleum & Coal Products.”

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