US manufacturing slides in March
By PAUL WISEMAN AP Economics Writer
WASHINGTON (AP) — American manufacturing slid last month for the first time since December, dragged down by economic fallout from the coronavirus outbreak.
The Institute for Supply Management, an association of purchasing managers, reported Wednesday that its manufacturing index fell to 49.1 in March after registering 50.1 in February. Any reading below 50 signals a contraction. The index had signaled growth in January and February.
Economists had expected a bigger drop in the index. Timothy Fiore, chair of ISM manufacturing index committee, said that “things got worse” as March dragged on and predicted that the index will signal more weakness in April. New orders and factory employment fell last month to the lowest level since the recession year 2009. Production and export orders also fell.
The COVID-19 pandemic and the quarantines, travel restrictions and business closings imposed to combat it have hammered global manufacturers, disrupting their access to supplies and crushing demand for their products. Manufacturers in Europe have also been hit hard.
But the impact of the outbreak is falling even harder on service businesses such as restaurants and hotels.
“Manufacturing is not, for the most part, in the very front line of the virus hit, but nonetheless large swathes of the sector are vulnerable as consumers cut back on spending on goods, especially big-ticket items like cars and trucks,” Ian Shephardson, chief economist at Pantheon Macroeconomics, wrote in a research report, adding that “while this headline ISM reading is a pleasant-looking surprise, don’t be fooled.”
Ten of 18 industries surveyed reported growth in March, but six contracted, led by energy companies, coal producers and textile mills.
Already weakened by President Donald Trump’s trade war with China, manufacturers around the world are reeling from COVID-19 and its economic impact. Also Wednesday, J.P. Morgan reported that its manufacturing index for the 19 European countries that share the euro currency dropped last month to the lowest level in nearly eight years. Confidence among eurozone manufacturers fell to a record low.