US manufacturing industry sees an 11-year low

The U.S. manufacturing industry reported an 11-year low for new orders in March, despite activity contracting less than expected. According to the Inst...

Jack Grimshaw
|Apr 2|magazine7 min read

The U.S. manufacturing industry reported an 11-year low for new orders in March, despite activity contracting less than expected. 

According to the Institute for Supply Management, national factory activity fell to a reading of 49.1 on its index last month. This is down from its reading of 50.1 in February - a better outcome than the reported drop to 45.0 forecasted by Reuters economists. 

The manufacturing industry makes up 11% of the U.S. economy, and a drop below 50 indicates contraction in the crucial sector. Disruptions due to the ongoing COVID-19 pandemic have been attributed to the causes of the reported slump.

The indicator has also revealed that suppliers’ delivery times have slowed. This typically would be associated with an increase in activity, unfortunately, this is not the case. As supply shortages continue, supplier deliveries will continue.

The Institute for Supply Management also reported that prices paid for raw materials and other outputs  fell to 37.4 last month, its lowest reading since January 2016, down from 45.9 in February.

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The current lockdown has more than half of the country staying inside whilst officials try to contain the spread of COVID-19, slowing the nation down to an almost complete standstill. With at least 164,000 confirmed cases, the U.S. currently has the highest number of cases worldwide, and the number only continues to grow. 

Economists believe that the country is already in recession following president Donald Trump’s US$2.2trn stimulus package last Friday. A recession is defined by the National Bureau of Economic Research by a decline in economic activity lasting more than a few months. 

For more information on manufacturing topics - please take a look at the latest edition of Manufacturing Global.

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