Consumers felt the squeeze of growing living expenses and cutback spending in March, and industry activity worldwide reflected that, according to surveys released on Monday.
According to a study by the Institute for Supply Management (ISM), industrial activity in the United States fell to its lowest level in almost three years as new orders continued to decrease. The PMI for its manufacturing sector dropped to 46.3 in March, the lowest level since May 2020, from February’s 47.7.
Reuters’ survey of economists expected the indicator to fall to 47.5. Yet the numbers show that manufacturing, which drives 11.3% of the GDP, is still expanding slowly.
Demand for products, often purchased on credit, has been dampened by rising borrowing prices as the Federal Reserve battles excessive inflation. But, the picture remains clouded by banking-sector difficulties, still-high inflation, and a weakening global economy, all of which suggest that the Federal Reserve may delay pausing its tightening cycle for some time. Manufacturing in the Eurozone declined further last month, while manufacturing costs decreased for the first time since the middle of 2020.
The output-focused PMI index, contributing to the composite PMI expected on Wednesday, increased to 50.4 from 50.1. March saw the worst drop in industrial activity in Germany in over three years, while France’s factory sector struggled under sluggish demand.
Manufacturer confidence in Britain rose as cost constraints subsided and supply chain issues were resolved. The pandemic’s effects on the supply chain have mostly abated, but many Asian economies are still vulnerable due to sluggish semiconductor demand and new signals of a slowing global economy. Manufacturing activity contracted in export-dependent Japan and South Korea in March, while growth halted in China, illustrating Asia’s struggle as policymakers attempt to keep inflation in line and fight off headwinds from falling global demand. The Caixin/S&P Global Manufacturing PMI in China dropped to 50.0 in March from 51.6 in February, far below market expectations of 51.7. In March, the PMI for South Korea fell to 47.6, the lowest reading in six months from February’s 48.5.
Japan’s au Jibun Bank PMI increased to 49.2 in March from February’s 47.7, although it still fell short of the 50 mark. In March, India’s manufacturing sector expanded rapidly in three months due to increased production and new orders, making it a rare bright light in the region. Manufacturing decreased in Vietnam and Malaysia in March, while growth slowed in the Philippines compared to the previous month.