March Institute for Supply Management

According to surveys conducted by the Institute for Supply Management (ISM), not only did the economy grow in March, it accelerated. Both segments of output turned in better tallies than those seen in the previous month. Some of the acceleration was influenced by weather (February was a particularly harsh month) but the uptick is encouraging nonetheless.

Manufacturing’s improvement was subtle, moving to 53.7 from 53.2 in the prior period, but any count over 50.0 is interpreted as growth. New orders remained high and increased. This leading indicator went from 54.5 to 55.1. New export orders were also strong with a reading of 55.5. Backlogs remained elevated as well with a tally of 57.5, a 5.5 point gain! Growing new orders along with accelerating backlogs mean manufacturers have lots of output to generate in the months ahead.

The service portion, the larger part of the economy, accelerated from 51.6 to 53.1. Employment made a large impact on the total. Non-manufacturing jobs subtracted from the indicator in February but gained 6.1 points in March to 53.6. Like the manufacturing segment, new orders accelerated in the service portion of the economy.

Atlas sees the combined ISM tally as a positive indication for the economy. There was concern about the pace of output during the winter, but this is giving us a positive first clue into the state of the economy without the inclement weather. It may be indicating that the scales on the economy’s bud were hearty enough to withstand the difficult winter, setting the stage for a full bloom in the spring. (by C. Cox)