Economic activity in the US manufacturing sector contracted in March for the fifth consecutive month, according to the Institute for Supply Management’s Manufacturing Report on Business, released today.

The Manufacturing PMI registered a reading of 46.3% in March, 1.4 percentage points lower than February’s 47.7% reading.  The ISM noted the Manufacturing PMI is at its lowest level since May 2020, when it registered 43.5%.

Only Manufacturing PMI readings above 50% indicate the manufacturing sector is expanding.

“The US manufacturing sector contracted again, with the Manufacturing PMI declining compared to the previous month,” said Timothy Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “With Business Survey Committee panelists reporting softening new order rates over the previous 10 months, the March composite index reading reflects companies continuing to slow outputs to better match the demand for the first half of 2023 and prepare for growth in the late summer/early fall period.”

In addition, the employment index fell to a reading of 46.9% in March from 49.1% in February.

“The index indicated employment contracted again, continuing a trend of weak performance since September 2022,” Fiore said. “Of the six big manufacturing sectors, only machinery and transportation equipment expanded. Labor management sentiment at panelists’ companies is approaching parity.”

Fiore noted that turnover rates in March were consistent with February, with both months recording their lowest levels since measurements began in mid-2021, while for those companies increasing their headcounts, comments continued to support an improving hiring environment.

The Manufacturing PMI is based on data compiled from purchasing and supply executives across the US.