The Economy

U.S. Factory Activity Posts 7th Straight Gain

Manufacturing is "benefiting from continued consumer demand, a turnaround in energy production, and an end to the strengthening of the U.S. dollar.”
Matthew HellerApril 4, 2017
U.S. Factory Activity Posts 7th Straight Gain

U.S. manufacturing activity rose for a seventh straight month in March while employment in manufacturing climbed to its highest level since June 2011, according to the Institute for Supply Management.

In its latest Report on Business, the ISM said its index of national factory activity fell slightly to 57.2% last month from 57.7% in February. Economists polled by MarketWatch had forecast a reading of 57.8%.

A reading above 50 indicates an expansion in manufacturing, which accounts for about 12% of the U.S. economy. For the second straight month, 17 of the 18 industries tracked by ISM said they are in expansion mode, which hasn’t happened for almost three years.

“After contracting in late 2015 and early 2016, U.S. manufacturing is now expanding,” said Gus Faucher, deputy chief economist at PNC Financial Services. “The industry is benefiting from continued consumer demand, a turnaround in energy production, and an end to the strengthening of the U.S. dollar.”

With manufacturers adding workers or asking them to work longer, the employment index rose 4.7 percentage points to 58.9%. It was the sixth straight month of growth in employment and, of the 18 industries surveyed, 14 reported growth.

The new orders index, which includes companies in apparel, chemical products, paper products and more, registered 64.5%, a decrease of 0.6 percentage point from the February reading of 65.1%.

The ISM also reported that new export orders rose 4 percentage points to 59% — the highest reading since November 2013 — and the raw materials prices index jumped 2.5 percentage points to its highest level since May 2011.

In March, 47% of respondents reported paying higher prices, 6% reported paying lower prices, and 47% of supply executives reported paying the same prices as in February.

In a separate report, the Commerce Department said construction spending increased 0.8 percentage points in February, its highest level since April 2006, after falling 1% in January.