The Institute for Supply Management’s (ISM) Manufacturing PMI for March released this morning measured in at 64.7, beating the consensus forecast by 3.2 points and suggesting the manufacturing sector across the US is recovering strongly.
This represents a 3.9-point increase from the headline figure in February. Of the 18 industries participating in the survey, 17 recorded growth in March and the six largest manufacturing industries all reported much stronger growth than expected.
The trade weighted dollar Index (DXY) remained lower on the session after the release.
The New Orders Index strengthened 3.2 points in March, and the employment index jumped 5.2 points, indicating the recovery of the manufacturing sector is moving in the right direction. This was also reflected in an increased ratio of optimal panel sentiment across all those who participated in the survey. From a demand perspective, things are looking strong.
However, the headline figure can be misleading, and does not point to the pressures which are still very real in the space. The Suppliers Deliveries Index jumped 4.6 points in March, with a higher number representing slower delivery times. This is the highest reported figure since the end of the oil crisis in 1974.
The effects of the pandemic were compounded by the impact of the February winter storm in the US, particularly in industries such as chemical products, which have a strong presence in Texas.
The Prices Index also increased for the tenth month in a row, which is not surprising given the impacts for supply chains. Input goods are becoming scarcer, giving increased pricing powers to suppliers. Prices overall are at the highest levels since the financial crisis in 2008, with all 18 industries reporting increased price pressures; steel, petroleum, coal, plastic and rubber were all impacted.
Overall, the narrative across the US manufacturing sector has been pretty consistent in the last three months. The demand for goods is still increasing, but the realities of production throughout the pandemic cannot be avoided. The backlog of orders is at the highest levels since 1993, and employee absenteeism is still causing concern.
Account Executive & Currency Analyst
“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.
Cambridge Global Payments (“Cambridge”) provides this document as general market information subject to: Cambridge’s copyright, and all contract terms in place, if any, between you and the Cambridge entity you have contracted with. This document is based on sources Cambridge considers reliable, but without independent verification. Cambridge makes no guarantee of its accuracy or completeness. Cambridge is not responsible for any errors in or related to the document, or for damages arising out of any person’s reliance upon this information. All charts or graphs are from publicly available sources or proprietary data. The information in this document is subject to sudden change without notice.
Cambridge may sell to you and/or buy from you foreign exchange instruments (including spot and/or derivative transactions; both kinds are here called “FXI”s) covered by Cambridge on a principal basis.
This document is NOT: 1) Advice of any kind, or 2) Approved or reviewed by any regulatory authority, or 3) An offer to sell or a solicitation of an offer to buy any FXIs, or to participate in any trading strategy.
Before acting on this document, you must consider the appropriateness of the information, based on your objectives, needs and finances. For advice, you must contact someone independent of Cambridge.
Certain FXIs mentioned in this document may be ineligible for sale in some locations, and/or unsuitable for you. Contact your Cambridge representative for further information regarding product availability/suitability before you enter into any FXI contract.
FXIs are volatile and may cause losses. Past performance of a FXI product cannot be relied on to determine future performance.
This document is intended only for persons in Canada, the US, and Australia. This document is not intended for persons in the UK or elsewhere in the EEA. In Australia, this publication has been distributed by Cambridge Mercantile (Australia) Pty. Ltd. (ABN 85 126 642 448, AFSL 351278); for the general information of its customers (as defined in the Corporations Act 2001). This entity makes no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law.
Fees may be earned by Cambridge (and its agents) in respect of any business transacted with Cambridge.
The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact the applicable Cambridge if you wish to use Cambridge services to enter a transaction involving any instrument mentioned in this document.
© Copyright 2018, Cambridge Mercantile Corp., ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Cambridge Mercantile Corp. See www.cambridgefx.com for contact details.