There were a few important reports on the U.S. economy released this morning. First, the manufacturing purchasing managers' index (PMI) from IHS Markit ended March at 53.3, the second monthly decline in a row following the nearly 2-year high hit in January. Under the hood, measures of production, new business growth, and total employment all deteriorated last month, and surveyed manufacturers cited “greater caution among clients, alongside intense competition for new work and subdued export sales.” Input cost inflation also intensified in March, with factory gate charges increasing at the fastest pace in more than two years. Chris Williamson, chief business economist at IHS Markit, added that “While the survey data suggest that the goods producing sector enjoyed a relatively good first quarter on the whole, the loss of momentum seen in February and March bodes ill for the second quarter.” Slightly more encouraging was the Institute for Supply Management's (ISM's) manufacturing index, also released this morning, which slid to 57.2 in March. While that was down from the February reading it was still better than expected, and the employment subcomponent rose to the best level since April 2011. However, the prices paid index, a measure of input cost inflation, jumped to a nearly 6-year high last month, and measures of new orders and production deteriorated. Comments from surveyed managers in March were largely mixed.
Elsewhere, a report from the U.S. Census Bureau showed that construction spending in America grew at an adjusted annual rate of $1,192.8 billion in February (lagged release). That was an increase of 0.8 percent from the previous month but just below the 1.0 percent advance economists had anticipated. On the bright side, January’s headline figure was revised higher, and public- and private-sector construction spending in America expanded together for the first time since October. Annual growth, though, remains weak compared to the past few years, and public-sector construction spending has been notably soft recently. All of that could change significantly if Congress and the new administration are able to move forward with their plans for major infrastructure investment.
Sources: Econoday, Bloomberg, ZH, Twitter, IHS Markit, ISM, U.S. DoC, FRBSLPost author: Charles Couch