Treasury

Manufacturing is back, baby—at least for some industries

But commodity prices are volatile and employment is still down.
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Andrii Yalanskyi/Getty Images

· 3 min read

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Think back to September 2022. It was a while ago, so we’ll help you get in that frame of mind: Roger Federer is playing his last pro tennis match. Lee Jung-jae accepts the Best Actor Emmy for his role in Squid Game. The name George Santos means nothing to you.

We harken back to that September because it was the last time manufacturing activity expanded until this March, according to the Institute for Supply Management (ISM), which shared the happy news that growth had returned as factories booked more orders and increased production.

The jump in orders showed that consumers are buying and businesses are investing, Bloomberg reported, noting that analysts had not expected factories to rebound just yet.

Behind the numbers. ISM’s monthly survey of purchasing and supply executives tracks changes in new orders, production, employment, supplier deliveries, and inventories to produce a composite measure of how much manufacturing activity is growing or shrinking. The Manufacturing PMI increased 2.5 percentage points from February to March, hitting 50.3%—just above the 50% threshold that signals the sector is growing.

Less good. ISM’s price index also hit its highest point since July 2022. “Commodity prices continue to be volatile, especially crude oil, aluminum and plastics,” ISM Manufacturing Business Survey Committee Chair Timothy Fiore said in a statement. March’s employment index was also less than sunny. While it picked up 1.5 percentage points from February, more layoffs ensured that head count continued to fall for the sixth month in a row.

Who’s up. Makers of textile products reported the most new activity in March, followed by manufacturers of nonmetallic mineral products (think concrete, sheetrock, and cut stone), paper, petroleum, and coal. Companies making food, beverage, and tobacco products (all one category, for some reason) also grew, as did companies that make fabricated metals, chemicals, and transportation equipment.

“[We’re] expecting to see orders and production pick up for the second quarter,” one transportation products executive told ISM. “Suppliers are working with us to help drive costs down, which will help improve the margin for the rest of the year and deliver growth in 2025.”

Who’s down. Furniture makers, manufacturers of plastic and rubber products, electrical equipment companies, and appliance and component makers all contracted in March. An executive in the computer and electronics industry, which also shrank last month, told surveyors that demand is still low, “but optimism is high that orders are ‘just on the horizon.’”

Miscellaneous manufacturing—representing the makers of everything from artificial Christmas trees and caskets to mops, trombones, and coin-operated amusement machines, not including jukeboxes—also shrank last month.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.