Manufacturing indices now above 50 but price pressures pick up too/Bond yields back above 1:59pm est level on FOMC day

The March ISM manufacturing index finally got back to a 50 handle for the first time since October 2022 at 50.3 vs 47.8 in February and 49.1 in January. That was 2 pts above expectations.

A 6.2 pt jump in production (fulfilling previous new orders) was the main factor for the upside to 54.6, the best since June 2022. New orders rose 2.2 pts m/o/m to 51.4 and the 2^nd month in the past 3 above 50 for the first time since the summer of 2022. Backlogs though remained well below 50 at 46.3, unchanged m/o/m. Inventories remained low at both manufacturers and customers with the former at 48.2 vs 45.3 and the latter at 44 vs 45.8. Employment rose 1.5 pts but still in contraction at 47.4. Export orders were unchanged at 51.6. Supplier deliveries at 49.9 was around the flat line for a 3^rd month. Finally, prices paid rose 3.3 pts to 55.8 and that is the most since July 2022.

Breadth improved slightly as 9 industries of 18 surveyed seeing growth vs 8 in February while 6 said their business contracted vs 7 in the month before. The balance saw no change in business.

I will add that it’s really hard to separate out the influence of the government incented manufacturing facility construction going on and the collateral impact that has to suppliers, in addition to whatever infrastructure projects are getting started via that legislative bill. That said, there is clearly some hope that after nearly 2 years of recession, the manufacturing sector is on the cusp of that inventory build. In this number though it is a mixed picture and not yet apparent and see below what the S&P Global report said on this. We also saw rising cost pressures as stated with prices paid and see below as to what S&P Global said on this too.