Manufacturing Held Up Better Than Expected in March but Likely Not for Much Longer

Chart Manufacturing Held Up Better Than Expected in March 4 2 20

The March Manufacturing PMI report showed some initial signs of trouble within the sector, but investors will have to wait another month to see the full effects of the global pandemic. Order backlog and new orders moved sharply lower as businesses slowed purchases. Of particular notice, a lengthening supplier delivery time positively impacted the composite this month. Under normal circumstances, longer delivery times occur due to increased demand, which is a positive. Under today’s circumstances, the longer delivery times derived from supply chain disruptions, which is a negative signal. As we have been saying, we expect economic data to get uglier over the coming weeks and months. However, stock and bond markets are forward-looking instruments and are likely already pricing in really bad future economic news.