US manufacturing contracts in March; outlook negative on coronavirus – ISM

HOUSTON (ICIS)–US manufacturing activity returned to a contraction in March, with a negative trajectory amid coronavirus concerns, the Institute of Supply Management (ISM) said on Wednesday.

“Comments from the panel were negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus (Covid-19) pandemic and energy market volatility,” said Tim Fiore, chair of the ISM.

“The coronavirus pandemic and shocks in global energy markets have impacted all manufacturing sectors.”

The ISM’s March purchasing managers’ index (PMI) had a reading of 49.1%, down 1 percentage point from February. PMI readings above 50.0% indicate growth.

	New Orders	Production	Prices
March Index (%)	42.2	47.7	37.4
February Index (%)	49.8	50.3	45.9
Change (% pts)	-7.6	-2.6	-8.5
Direction	Contracting	Contracting	Decreasing
Rate of Change	Faster	From Growing	Faster
Trend (months)	2	1	2

Of the 18 manufacturing industries, 10 reported growth including chemical products and plastic and rubber products.

Six reported contraction including petroleum and coal products.

“The two main issues affecting our business [are] Covid-19 and the oil-price war,” said a respondent in the chemical products industry. “We are in daily discussions and meeting constantly, updating tracking logs to document high risk concerns.”

A respondent in the plastics and rubber products sector said: “All North American manufacturing plants have ceased operations or drastically scaled back as a result of customer plant closings and other responses to Covid-19.”

A machinery industry respondent noted a 30% reduction in productivity at its factory, while a furniture industry respondent said volumes are down 4.3%.

“World demand for petroleum products is declining, while supply is ramping up,” said a respondent in petroleum and coal products. “We have lost supply chain visibility to certain locations.”

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