(Reuters) – U.S. manufacturing activity fell in March to its lowest level in nearly three years as new orders continued to contract, and activity could decline further amid tighter conditions credit, shows the monthly survey of the Institute for Supply Management (ISM) published Monday.
The ISM manufacturing index fell to 46.3 in March, the lowest level since May 2020, from 47.7 the previous month, while economists polled by Reuters on average expected a figure of 47.5.
The index thus remains below the threshold of 50, which indicates a contraction in activity, for the fifth consecutive month.
The so-called “hard” data, however, suggested that the manufacturing industry, which accounts for 11.3% of the US economy, continues to grow moderately.
Manufacturing grew at a 4.5% year-on-year rate in the fourth quarter, the government said last week. Last month’s data also showed that orders for capital goods, excluding aircraft, rose slightly in February, as did manufacturing output.
Rising borrowing costs, as the Federal Reserve (Fed) fights inflation by raising interest rates, has dampened demand for goods, which are typically bought on credit, and demand could also be put off. under pressure following the collapse of two regional banks early last month.
The tightening of lending conditions by banks could also make access to credit more difficult for small businesses and households.
The new orders sub-index fell to 44.3 from 47 in February The ISM survey’s forward-looking new orders sub-index fell to 44.3 last month from 47.0 in February as backlogs of Work continues to shrink due to lower demand as well as improving supply chain conditions.
The employment sub-index fell to 46.9 from 49.1 in February as weak demand failed to prompt factories to increase employment.
The paid price sub-index fell to 49.2 in March from 51.3 in February.
(Report Lucia Mutikani; French version Diana Mandiá, edited by Kate Entringer)
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