USD Gives Back All Friday’s Gains As ISM Manufacturing/Prices Soften

This is the fifth consecutive month with a score below 50 points, which means contraction and is the lowest since the pandemic began. According to the report, this is due to the decrease in freight and rail loads as inventories are being reduced and production returns to normal levels following the pandemic.

US March 2023 ISM Manufacturing Survey

March ISM manufacturing index 46.3 points vs 47.5 prelim

February ISM was 47.7 v

Prices paid 49.2 points vs 51.0 estimate.

February was 51.3 points

Employment 46.9 points vs. 49.1 last month

New orders 44.3 points vs. 47.0 last month

Production 47.3 points vs 47.3 last month

Order backlog 43.9 points vs. 45.1 last month

New export orders 47.6 points vs. 49.9 last month

Imports 47.9 points versus 49.9 last month

Comments in the report:

“Orders and production are fairly flat month over month. Lead times have stabilized in most areas, so looking at reducing commitments on new orders, except for a few strategic electronic buys with lead times that are still too long.” [Computer & Electronic Products]

“Sales a bit down, and budgets being cut with a greater emphasis on savings.” [Chemical Products]

“Business is doing generally well, with input costs falling in some areas and rising in others.” [Food, Beverage & Tobacco Products]

“Sales are slowing at an increasing rate, which is allowing us to burn through back orders at a faster-than-expected pace.” [Transportation Equipment]

“Lead times are still improving, but prices continue to face inflationary pressures. Prices of steel and steel products are going up some. Hydraulic components are still facing extended lead times. We are increasing inventory levels of imports due to global uncertainty from the ongoing war in Ukraine and threats from China.” [Machinery]

“Overall, (our) first quarter is going better than planned, with sales increases of about 7 percent versus a budget of 4.5 percent. However, sales volume is pulling down our automotive original equipment manufacturer (OEM) side, which is the majority of our business. We believe the second quarter will be hard but are holding to our outlook.” [Fabricated Metal Products]

“Business is still slow overall. Customers have not yet picked up orders at pre-pandemic levels.” [Apparel, Leather & Allied Products]

“Overall, things feel more stable in the first quarter 2023 than they did throughout 2021-22. Customer demand is — as expected — growing well, and the overall supply environment is far better than the previous two years. This is not to say there are not challenges; there absolutely are. However, there are fewer issues cropping up each week, and supply challenges are generally more like the ‘typical’ issues we experienced before the pandemic. We are closely monitoring the global banking situation, but no impacts have been experienced or are expected at this time. Ongoing tensions between the U.S. and China are another issue to watch.” [Miscellaneous Manufacturing]

“New orders are starting to soften and supplier deliveries are improving slightly. This is allowing us to reduce (our) backlog and build a buffer in some categories. The supply chain disruption — particularly in electronics — is still significant compared to pre-pandemic conditions.” [Electrical Equipment, Appliances & Components]

“Overall, business continues to remain strong. We are still experiencing supply chain issues on several indirect supplies.” [Primary Metals]

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.