US PMI Data Indicates Slower Growth In Manufacturing

The institute of supply management data shows that the US manufacturing has slowed down. The ISM manufacturing purchasing managers’ index (also called PMI) fell to 51.3 in March 2013 against 54.2 in February 2013. The index indicates a 46^th month of growth in the index and fourth consecutive month of expansion in the economy.

As per the ISM reports, the new orders have declined sharply from 57.8 to 51.4 within one month’s period. This indicates continuation of the expansion in new orders, but at a lower rate.

The data provider, Market Economics which also publishes its own manufacturing PMI, came out with its final reading of the March PMI yesterday (April 1, 2013). In its report it has said that the US manufacturing PMI rose from 54.3 in February 2013 to 54.6 in April 2013. This indicates an expansion in the US manufacturing at a faster rate, in contrast to what the ISM has reported. The manufacturing output as per Markit Economics has expanded at a slower rate. The new orders have shown an expansion too but the magnitude is not changed in either direction.

The reports however claimed that the employment level has gone up significantly which is a good sign. The backlog of work has also expanded which indicates that the year will further see an improvement in the scenario.

In the last month, the US reports indicated that the country’s consumer spending has increased despite a rise in the taxes. The economists are also expecting an uptick in the GDP numbers. The fresh data however is quite confusing as the output has shown some decline and new orders are at a lower side.

We believe that although the two data are not in sync, it still gives a positive picture of the economy. The same is reflected in the US indices which are now trading at their highest trading levels. A further improvement in the scenario would help the recovery in the global economy.