US ISM manufacturing PMI edges lower in March, but details very weak
A key gauge of US manufacturing sector conditions for March printed ahead of forecasts but sentiment around the near-term growth prospects for the economy were described as "strongly negative".
There were also abundant reasons to believe that the hit to activity in the sector was being understated due to the way that the gauge was calculated.
The Institute for Supply Management's manufacturing sector Purchasing Managers' Index fell from a reading of 50.1 for February to 49.1 in March (consensus: 46.0).
Typically, that would indicate just a small contraction in overall activity levels because the PMI index remained close to the 50 point theshhold that denotes growth.
However, the surprisingly resilient reading was distorted by a jump in a sub-index for supplier deliveries from 57.3 to 65.0.
That sub-index usually rises in response to strong demand, with firms unable to meet orders, but at present it was doing so because companies' supply chains were being disrupted.
"This is not a favorable development, but in any event it likely will reverse over the next couple of months as China factories come back on line," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
"At that point, the headline index will have no counterpoint to falling orders, production, and employment, and we expect it to return to its December 2008 low, 34.5, by June."
A separate sub-index for new orders on the other hand improved fell sharply, from 49.8 to 42.2 and another tracking employment from 46.9 to 43.8.