The latest Markit flash manufacturing PMI for the US revealed disappointing results for March 2016. The index showed that manufacturing activity in the US economy has continued to flatline in March, falling short of an expected rise.
Pointing out that the latest data “indicated subdued growth momentum across the US manufacturing sector”, Markit noted in its press release that this was part of a “continuing the trend seen throughout 2016 to date”. The new release also noted that while activity had increased “fractionally from 51.3 in February”, it still remained “well below the post-crisis average [of 54.1]”. With Q1 of 2016 taken as a whole, it was the weakest improvement in quarter experienced since Q3 2012.
An increased rate of output, new business and manufacturing job growth was recorded in March, however, these gains were heavily off-set by a steep fall in pre-production inventories – the sharpest decline since January 2014. Stocks on finished goods were also reported to have seen their largest fall since November 2015, while supplier performance saw a slight dip.
With bad weather being blamed for poor manufacturing activity results in January and February of 2016, manufacturing was predicted to make a strong rebound in March. Markit’s Chief Economist, Chris Williamson, underlined this point, noting: “The lack of a stronger rebound is a disappointment, given that many companies reported bad weather to have hit activity in the first two months of the year.”
The disappointing performance of manufacturing, however, does not seem to be occurring throughout the US, with some Federal Reserve districts’ measures of manufacturing activity showing more positive results. The Richmond Fed Manufacturing Index, released on the same day as the Markit flash manufacturing PMI, showed that manufacturing activity in the Richmond Fed district had seen expansion, alongside manufacturers reported to be expecting “robust business conditions during the next six months”.
The Philadelphia Federal Reserve also reported strengthening manufacturing conditions in its March Manufacturing Business Outlook Survey, noting “general activity rose sharply in March to its first positive reading in seven months”.