Economists surveyed by Bloomberg News had expected the index to fall to 48.0 in March 2008. The ISM Manufacturing Index was 48.3 in February 2008.
An index reading below 50 indicates a contraction and the ISM Manufacturing Index has now registered below 50 in three of the past four months.
Further, the prices paid component jumped to 83.5 in March 2008 from 75.5 in February 2008, indicative of continued cost pressures at the wholesale level. Production declined to 48.7 from 50.7, new orders fell to 46.5 from 49.1, and imports declined to 45.0 from 47.5.
The bright spots? The index's export component rose to 56.5 in March 2008 from 56.0 in February 2008, while the backlog of orders increased to 47.5 from 45.0.
A weak quarter
Economist David H. Wang said investors/readers should not be deceived by the ISM Manufacturing Index's minor rise in March 2008. Wang said the March data "completes a very weak quarter, from the U.S. economy, with a sluggish manufacturing performance." Wang now expects the U.S. economy to register negative growth in both Q1 and Q2 2008.
Wang said U.S export sales continue to improve, aided by the weak U.S. dollar, but it's not nearly enough to offset slumps in the U.S. housing and manufacturing sectors, among other sectors. "We know what conditions are like in housing, and manufacturers are also encountering slack demand," Wang said.
Further, Wang added that the March new orders component, which plummeted to 46.5 in March from 49.1 in February, is also troubling, as new orders are an accurate barometer of economic conditions a quarter or two ahead. Right now, he said, that index is signaling no growth up ahead.
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