US business conditions in March
The March final manufacturing PMI (purchasing managers’ index) report indicates a softening environment in the US business condition. It stood at 53.3 in March 2017, compared to 54.2 in February 2017. However, it was slightly below the preliminary reading of 53.4.
The US manufacturing PMI showed gradual improvement until January 2017. Although the February and March 2017 PMI readings showed some slowdown, the PMI figure was in the expansion zone. A level above 50 indicates expansion in the activity, while anything below 50 indicates contraction.
Let’s look at some of the key factors in the manufacturing PMI:
- Production volume rose at a slower rate in March 2017 compared to February 2017.
- Employment in the manufacturing sector also showed a weaker improvement.
- New order growth and output showed a soft improvement as the export sales showed a subdued performance in that month.
Performance of various ETFs in March
The Industrial Select Sector SPDR ETF (XLI), which tracks the performance of the US industrial sector, fell 2.8% in March 2017. The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500 Index, fell nearly 1.4% in March 2017.
The slower improvement in manufacturing PMI indicates that manufacturing activity slowed in March. The gradual fall in employment in the manufacturing sector is proving that the manufacturing activity is declining.
According to the Bureau of Labor Statistics, nearly 32% of the labor engaged in the manufacturing sector in 1953. However, it fell to 8.7% in 2015. These trends show that investors are somewhat concerned about economic (VOO) (IVV) (QQQ) growth and particularly the manufacturing sector.
In the next part of this series, we’ll analyze the performance of France’s manufacturing PMI in March 2017.