The ISM manufacturing index in March climbed to the highest level since 1983, with a reading beating expectations. Analysts at Wells Fargo, point out that while many components shot higher, a key factor was supply-chain constraints which drove supplier deliveries to its highest level since 1974 when the oil embargo’s effects were still fading.
Key Quotes:
“The ISM manufacturing index catapulted to 64.7 in March””the highest reading in 37 years. Manufacturing sentiment is the most upbeat it has been in recent memory, although ongoing supply chain constraints continue to be a headache for businesses. This is evident in the fact that supplier deliveries jumped to 76.6 during the month.”
“The delays and lack of needed materials are translating into inflationary pressure. The prices paid component edged down just a few ticks last month to 85.6, which keeps it near a 12-year high. All 18 industries reported increases in raw materials last month.”
“The U.S. economy is rebounding faster than other parts of the world, and while we do expect the rest of the world to catch up, this temporary divergence in the growth trajectories is consistent with our expectation for imports to outpace exports this year which, if realized, would result in a modest drag on GDP growth.”
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