(Bloomberg) -- U.S. factories expanded at a robust yet slightly slower pace in March and tariffs helped drive a measure of raw-material prices to an almost seven-year high, data from the Institute for Supply Management showed Monday.
Highlights of ISM Manufacturing (March)
A measure of customer inventories dropped to the lowest since July 2011 and a gauge of backlogs held at an almost 14-year high. Together that indicates factories continue to have trouble keeping up with demand from consumers and businesses, while paying ever-higher prices for raw materials.
Some of the rising costs were attributed to President Donald Trump’s tariffs on imported steel and aluminum, with one respondent in the machinery sector saying “panic buying” is also resulting in shortages for some customers. Timothy Fiore, chairman of the ISM manufacturing survey committee, said about 32 percent of comments related to tariff concerns, and businesses began stocking up in response to the tariff announcement.
“The reason the price index went up this month was primarily because of the tariffs,” Fiore said on a call with reporters. Many of the concerns were less about trade wars and more focused on whether the tariffs would limit availability around production schedules, he said.
Even so, the figures are consistent with expectations of further gains in manufacturing production in coming months, and the main index remains near the highest level since 2004. While a measure of factory payrolls softened, the underlying details of the ISM report bode well for employment. The Labor Department’s March jobs report is due later this week.
- Seventeen of 18 industries reported growth in March, led by fabricated metal products and plastics and rubber products; apparel was only sector to report decline
- ISM index of backlogs held at 59.8, the highest level since May 2004
- Measure of production eased to 61 from 62
- Export orders measure fell to 58.7 from 62.8
- Supplier deliveries gauge cooled to 60.6 from 61.1
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