March’s final Manufacturing PMI printed at its highest level since 2015 (though very slightly below its flash print) driven by rises in new orders, output, and surging inflation.
However, while the headline data is positive, input costs rose to the greatest extent since November 2012, with companies stating that price rises often stemmed from recently announced tariffs and higher raw material costs. Average prices charged also continued to increase, with the rate of inflation quickening to the fastest since December 2013.
ISM Manufacturing confirmed this inflationary surge, with Prices Paid spiking to their highest since April 2011…
However, the headline ISM Manufacturing print disappointed, falling (in line with US hard macro data) as PMI rose…
In fact only prices paid rose across the ISM subcomponents flashing a stagflationary warning message.
Commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit said:
“US factories reported a strong end to the first quarter, with the PMI advancing to a three-year high. The goods producing sector should therefore make a positive contribution to economic growth in the first quarter, as rising demand fueled further improvements in factory production.
“Optimism about the year ahead has meanwhile also risen to its highest for three years, generating yet another solid payroll gain and suggesting strong growth momentum will be sustained in the second quarter.
“Companies cited rising demand at home and abroad plus recent government policy announcements as helping shore up confidence in terms of their future production levels.
“However, recent tariff announcements were already reported to have added to inflationary pressures, and also led to the stockpiling of goods expected to rise further in price in coming months. Input cost inflation consequently hit the highest since 2012. 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.”
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