ISM® PMI® Reports Roundup: March Manufacturing

The previous release of the ISM^® Manufacturing PMI^® Report occurred in the wake of the U.S. Supreme Court striking down President Donald Trump’s emergency tariffs and U.S. and Israeli forces launching strikes against Iran. The verdict then: Wait and see.

With a month to digest the impacts of both events, U.S. factory activity continued to expand in March — but Institute for Supply Management^® (ISM^®) Manufacturing Business Survey panelists made their uncertainties clear. Also, the Prices Index continued its vault to a four-year high, and less demand strength raised yellow flags that growth could be temporary.

As a result, it’s more waiting and seeing in the aftermath of a Manufacturing PMI^® reading of 52.7 percent, indicating a third straight month of expansion.

@grok If U.S. manufacturing continues to expand despite economic uncertainty, as reflected in the ISM Manufacturing PMI beating expectations, does this signal true economic resilience—or could it be masking deeper vulnerabilities that haven’t surfaced yet?

— THEDUS T 📈 (@THED_FX) April 1, 2026

“Our concern is that the demand indicators are going in the wrong direction,” said Susan Spence, MBA, Chair of the ISM Manufacturing Business Survey Committee. “If that continues, the production expansion trend will reverse with an increase in new orders to keep that going.”

She continued, “With the new uncertainty of the Iran war plus the large increases in prices in recent months, that does not bode well for continued (expansion). We saw that throughout last year with the chaotic tariff environment — the uncertainty with ongoing questions on new replacement tariffs probably means that businesses are still hesitant to hire and expand manufacturing.”

The PMI^® increase was due to boosts in two of the five subindexes that feed into its calculation. The Production Index increased 1.6 percentage points to 55.1 percent, thanks in part to orders in previous months working through the value chain, and the Supplier Deliveries Index elevated to 58.9 percent, a 3.8-point gain and its highest reading since May 2022 (65.7 percent).

A higher Supplier Deliveries Index reading indicates longer lead times, which are typical amid higher demand or supply disruptions. In March, it could have been a little of both.

But decreases in the New Orders (53.5 percent) and Backlog of Orders (54.4 percent) indexes and the New Export Orders Index (49.9 percent) moving into contraction are potentially problematic, on top of the uncertainty over the Middle East and tariffs, Spence said.

“If there were a healthy and sustaining backlog, (companies) would be more certain about taking the risk of hiring and training people,” she said. “You don’t do that if they might not be needed six months later if the orders don’t continue. So, panelists are telling us the uncertainty drives them to not hire or spend capital.”

In the wake of a sobering federal Job Openings and Labor Turnover Survey (JOLTS) report for February and better-than-expected ADP private payrolls data for March, the ISM Manufacturing Employment Index registered 48.7 percent, a 0.1-percentage point decrease compared to February, reflecting the sector’s hiring inertia.

US ISM’S SPENCE TO REPORTERS: MANUFACTURING EMPLOYMENT STUBBORNLY STUCK IN CONTRACTION AMID TARIFF UNCERTAINTY #ISM #manufacturing #jobs #tariffs

— Mace News (@MaceNewsMacro) April 1, 2026

“I would like to think companies are getting super productive (with their workforces),” Spence said. “But panelists are saying they are holding and will try to keep the same staffing levels or increase overtime.”

Among the yellow flags in the data, the Prices Index was closest to red. With a 19.3-percentage point surge in the last two months, the March reading of 78.3 percent is the highest since June 2022 (78.5 percent). It’s “too soon to tell,” Spence said, how much of these price gains are the result of hostilities in the Middle East, but she added that the conflict mixed with ongoing trade tensions make for a bad cocktail.

That sentiment was confirmed by a Manufacturing Business Survey panelist in Chemical Products, who wrote: “Geopolitical tensions related to the conflict in Iran are contributing to rising manufacturing supply costs, and ongoing tariff uncertainty is negatively impacting purchasing strategies and cost forecasts.”

In the meantime, the manufacturing sector is hopeful for a quick resolution in the Middle East, as well as with the trade landscape after the Supreme Court struck down the International Emergency Economic Powers Act (IEEPA) tariffs. However, that’s asking for a lot of certainty from a Trump administration that typically provides little.

“People have got to be more certain about what the next move is of the administration,” she said. “Once they have that, perhaps they’ll go ahead and start ordering again. Panelists told us there was some relief at the Supreme Court ruling … but as soon as you breathe a sigh of relief, then you have the news of the Iran war.”

She concluded, “So, things need to settle down, to say the least.”

The ISM^® PMI^® Reports roundup:

Barron’s: U.S. Manufacturing Expands for Third Straight Month. Caution Is Still Warranted. “Three makes a trend. The U.S. manufacturing economy has grown for three consecutive months, despite some rising headwinds that investors should watch. … Economists surveyed by FactSet expected a reading of 52 percent, so things were better than expected.”

Bloomberg: U.S. Manufacturing Expands Most Since 2022, Input Costs Jump. “Higher input costs may put pressure on U.S. manufacturers to raise prices, suggesting that overall inflation will run hotter through the year. Economists in a recent Bloomberg survey revised up their forecasts for inflation.”

Logistics Management: Manufacturing Remains on a Growth Track in March for Third Consecutive Month, Reports ISM. “Spence also added that the current tariff outlook — with the Supreme Court ruling in February that the White House’s IEEPA tariffs were illegal, coupled with the current 10-percent Section 122 tariffs intact through late July and ongoing Section 301 investigations — puts manufacturers in a tough spot, in that shifting trade policies make it difficult for companies to plan and make capital investments.”

ISM Manufacturing Index: the prices paid component jumped to 78.3 from 70.5 previously. It’s up from 59 in January.

It’s both turn of the year pricing and the first evident in sentiment surveys of the impact of the war on pricing.

— Joseph Brusuelas (@joebrusuelas) April 1, 2026

Mace News: Manufacturing PMI^® in Expansion for Third Straight Month but Mideast War Compounds Uncertainty Already Heightened by New Trump Tariffs. “(Spence) told reporters that 17 out of 18 the industries covered by the ISM reported higher costs in March, which is ‘very, very concerning’ and ‘going in the wrong direction.’ She also said the Employment Index has been ‘stubbornly stuck in contraction’ as firms continue to reduce staff amid uncertainty.”

MarketWatch: U.S. Manufacturers See Best Month in 2½ Years, but Iran War Threatens to Derail Progress. “(A) seeming recovery in manufacturing after a prolonged slump faces fresh obstacles, the most notable being the conflict with Iran. A surge in oil prices has raised business costs and left manufacturers confronting more uncertainty. A Supreme Court ruling that struck down the original Trump tariffs offered some relief, but now companies are wondering what will replace them.”

Reuters: U.S. Manufacturing Sector Grows in March; Supplier Delivery Performance Deteriorates. “Despite last month's rise in the PMI^®, tariffs remain ‌a constraint on manufacturing, which accounts for ​10.1 percent of the economy. ​The sector has yet to experience the rebirth that Trump envisioned with his import duties, which were struck down by the U.S. Supreme Court. Trump has since announced a global ​duty.”

Supply Chain Dive: Manufacturing Sector Expands for Third Consecutive Month, but War, Tariffs Cause Worry. “The war in Iran and continued anxiety over tariffs and other trade policies do not bode well either, Spence added. Although the percentage of negative comments from survey respondents remained about the same as last month, the reasons for those comments have changed, she said.”

The Wall Street Journal: ISM Manufacturing Survey Shows Rising Price Pressures. “All the commodities categories tracked by the survey rose in price, and none declined. Respondents to the survey said the war is adding to uncertainty and raising costs.”

With New York Stock Exchange group markets closed on Good Friday, the ISM^® Services PMI^® Report will be unveiled on Monday. For the most up-to-date content on the ISM^® PMI^® Reports, use #ISMPMI on X, formerly known as Twitter.

(Photo credit: Getty Images/Denis Torkhov)