News & Insights

In March, the U.S. manufacturing sector expanded for the third consecutive month and at a slightly faster pace than the prior month, with the ISM Manufacturing® PMI increasing to 52.7% from 52.4% in February. Certain demand indicators, such as the New Orders and Backlog of Orders indexes, remained in expansion territory, while the New Export Orders Index fell back into contraction territory. Meanwhile, the Customers’ Inventories Index continued to contract into “too low” territory but at a slower pace, climbing 1.3 percentage points to 40.1. Meanwhile, the Production Index expanded at a faster pace in March, rising from 53.5% to 55.1%.

The New Orders Index expanded for a third consecutive month in February but at a slower pace, falling 2.3 percentage points from February to 53.5%. Of the six largest manufacturing sectors, four—machinery, transportation equipment, chemical products and computer and electronic products—reported an increase in new orders. Optimism about near-term demand was mixed, with a negative comment for every positive comment.

The New Export Orders Index returned to contraction territory in March after two consecutive months of growth, dropping 0.4 percentage points to 49.9%. Respondents remained concerned about trade frictions, with a negative comment for every positive comment. Meanwhile, the Imports Index expanded for the second consecutive month but at a slower pace in March, down 2.3 percentage points from February to 52.6%.

The Employment Index contracted for the 30th consecutive month at roughly the same pace as the prior month, ticking down 0.1 percentage point from February to 48.7%. Of the six largest manufacturing sectors, two—transportation equipment and machinery—reported increased employment. For every comment on hiring, 1.2 respondents noted reduced headcounts.

After surging 11.5 percentage points in February, the Prices Index jumped another 7.8 percentage points in March to 78.3%, indicating raw materials prices grew for the 18th straight month and at a much faster pace than the prior month. Of the six largest manufacturing sectors, all reported increased prices. The increase continued to be driven by higher steel and aluminum prices impacting the entire supply chain and the tariffs applied to most imported goods, as well as increases in petroleum-based products as a result of the Middle East conflict. Roughly 59.4% of companies reported paying higher prices, the highest share since June 2022 and up from 45.4% in February and from 21.0% in January 2025.