Manufacturing Measure Declines for Fifth Consecutive Month

By at 4 April, 2023, 12:17 pm

by Raymond J. Keating –

The Institute for Supply Management’s purchasing managers manufacturing index declined for the fifth straight month in March.

The Manufacturing PMI for March registered 46.3 percent, which was down from 47.7 percent in February. A reading below 50 percent signals that the manufacturing sector is contracting.

Six manufacturing sectors reported growth in March: “Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Petroleum & Coal Products; Primary Metals; and Machinery.”

Twelve manufacturing industries reported contraction: “Furniture & Related Products; Nonmetallic Mineral Products; Textile Mills; Plastics & Rubber Products; Paper Products; Wood Products; Food, Beverage & Tobacco Products; Apparel, Leather & Allied Products; Chemical Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; and Transportation Equipment.”

Timothy R. Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee, noted: “Regarding the overall economy, this figure indicates a fourth month of contraction after a 30-month period of expansion. The Manufacturing PMI is at its lowest level since May 2020, when it registered 43.5 percent.”

It must be kept in mind that manufacturing is overwhelmingly about small business, with 74 percent of employer firms in the manufacturing sector having fewer than 20 employees and 93 percent fewer than 100 workers.

Manufacturing has been struggling since the Great Recession hit. It’s long overdue that policymakers focus on measures that will provide a sound foundation upon which entrepreneurship, investment and innovation can flourish in the manufacturing sector. That’s not about industrial policy measures, where politicians dole out subsidies and protections, but rather it’s about providing real, permanent relief from overregulation, tax reductions, and advancing free trade accords that reduce manufacturers’ costs and open new opportunities.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.


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