ISM Manufacturing PMI — March 2025
Headline: The Manufacturing PMI fell to 49.0 from 50.3 in February, returning to Contracting territory after one month at that level. The reading remains above the prior six-month average of 48.8, within the 46.5–50.9 six-month range. Manufacturing is below its 50.0 breakeven, while the broader economy remains Growing: the PMI is above the overall-economy breakeven of 42.3.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo |
|---|---|---|---|---|---|
| New Orders | 45.2 | 48.6 | -3.4 | Contracting | 6-mo low |
| Production | 48.3 | 50.7 | -2.4 | Contracting | below avg (49.4) |
| Employment | 44.7 | 47.6 | -2.9 | Contracting | below avg (46.6) |
| Supplier Deliveries | 53.5 | 54.5 | -1.0 | Slowing | above avg (51.4) |
| Inventories | 53.4 | 49.9 | +3.5 | Growing | 6-mo high |
| Customers' Inventories | 46.8 | 45.3 | +1.5 | Too Low | below avg (47.3) |
| Prices | 69.4 | 62.4 | +7.0 | Increasing | 6-mo high |
| Backlog of Orders | 44.5 | 46.8 | -2.3 | Contracting | above avg (44.3) |
| New Export Orders | 49.6 | 51.4 | -1.8 | Contracting | above avg (48.9) |
| Imports | 50.1 | 52.6 | -2.5 | Growing | above avg (49.6) |
Key moves:
- New Orders fell to a six-month low of 45.2, while Production crossed below 50 to 48.3; both point to weaker near-term factory demand and output.
- Inventories rose to a six-month high of 53.4, crossing from contraction to growth even as New Orders weakened—a notable adverse demand/inventory divergence.
- Prices reached a six-month high of 69.4, up 7.0 points, indicating a sharp acceleration in input-cost pressure.
Insights:
- The inventory build appears more likely involuntary than demand-led: Inventories reached 53.4 while New Orders fell to 45.2 and Backlogs contracted at 44.5. That combination raises the risk of future production restraint.
- The forward-demand picture deteriorated materially. New Orders contracted faster and hit a six-month low, while Backlogs extended their contraction to 30 months; the modestly above-average backlog level does not offset its persistent contraction.
- Customers’ Inventories remained “Too Low” at 46.8, a contrarian positive for future orders because downstream customers may need to replenish. However, this support is not yet visible in New Orders, which fell sharply and remains well below 50.
- Supplier Deliveries at 53.5 indicate slower deliveries and remain above their six-month average, consistent with supply tightness or constraints. With weak orders but elevated Prices, the reading points more clearly to input-cost and supply pressure than to broad demand strength.
- Employment contracted faster at 44.7, and Production moved below 50. The deterioration in labor and output therefore extends beyond the headline reversal and suggests weaker manufacturing momentum.
Breadth & prices: Nine industries reported growth and none were listed as contracting. Input prices were increasing, with the Prices Index rising to 69.4, its six-month high.
Takeaway: March signals a renewed manufacturing contraction characterized by weak orders, falling output and employment, and an unfavorable inventory buildup. The combination of cyclical softness with sharply higher input costs is a negative margin signal, although low customer inventories could provide a future reordering catalyst.