The manufacturing purchasing managers' index (PMI) from IHS Markit ended March at 55.6. That is the highest print in three years and puts Q1 2018 on track for the best quarterly performance since 2014. Surveyed managers attributed their positive outlooks to “firmer client demand,” but respondents also complained about rising cost burdens. Moreover, the rate of inflation accelerated to the fastest pace since 2012, with companies stating that “price rises often stemmed from recently announced tariffs and higher raw material costs.”
Chris Williamson, Markit’s chief business economist, added that “increased costs were often passed on to customers, meaning prices charged for goods at the factory gate showed the steepest rise in over four years.” Slightly less encouraging was the Institute for Supply Management's (ISM's) manufacturing index, also released this morning, which ended March at 59.3. That is down slightly from February but still one of the highest readings of the current business cycle. Measures of new orders, production, employment, foreign trade, and margin strain all deteriorated last month, and comments from surveyed managers suggest that the supply of both materials and skilled workers remains a problem.
Sources: Econoday, IHS Markit, ISM, Bloomberg, ZH, FRBSLPost author: Charles Couch