Surprisingly, though, 59.3 isn’t a new high for the American manufacturing industry. The industry’s ISM rating his a 14-year high in February, during which it received a 60.8 index rating. As you may already know, any reading over 50 signals growth and expansion, whereas readings below 50 signal contraction. With the American manufacturing industry receiving a 59.3 ISM index rating for March, it’s still growing at a rapid pace, though slightly slower from the previous month.
When breaking down the ISM’s report, the American manufacturing industry had experienced fewer new orders, lower overall production volume and less employment growth in March than in February. However, the good news is that these numbers were still some of the highest reported for the market in several years. So, while the American manufacturing industry received a slightly lower ISM index rating for March, it’s still growing and helping to drive a healthy economy.
It’s important to note, however, that the cost of materials paid by American manufacturers had rose to their highest levels in several years. Market analysts say there are several factors attributed to the high cost of manufacturing materials, the most influential being recently passed tariffs on steel and aluminum.
Even with these tariffs and fears of additional tariffs being placed on American exports, the country’s manufacturing industry remains strong. Statistics show that the country’s unemployment rate is at its lowest levels in more than a decade, and new tax cuts are allowing Americans to buy more products.
To create the ISM index, researchers send surveys to more than 300 of the country’s leading manufacturing companies. In these surveys, respondents must answer questions about their organization’s activities, some of which include the number of new orders they’ve received, how many products they are making, employment numbers, deliveries, inventories, backlogs, import and export and more. Using this information, ISM researchers calculate the overall health of the American manufacturing industry on a scale from zero to 100, with zero being the weakest and 100 being the strongest.
It’s unknown how the American manufacturing industry will fare for the month of April. If past reports are any indication of what’s to come, though, it will likely hover around the 59 mark. But who knows, it could propel even higher from here as there’s a greater focus on made-in-America products.