Economic activity in the manufacturing sector fell for the fifth month in a row in March, according to the latest Manufacturing Institute of Supply Management (ISM) Report On Business released Monday.
The March Manufacturing PMI came in at 46.3, the lowest since May 2020, down from 47.7 in February and falling short of estimates of 47.5.
All 10 subindices exhibited contractionary levels for the month, and eight out of 10 accelerated their decline from the previous month.
March ISM Reading Consistent With Drop In Real GDP: "The March composite index reading reflects companies continuing to slow outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
"The past relationship between the Manufacturing PMI and the overall economy indicates that the March reading (46.3 percent) corresponds to a change of minus-0.9 percent in real gross domestic product (GDP) on an annualized basis."
US Yields Down, Stocks Up: The release of the lackluster March ISM Manufacturing PMI prompted Treasury yields to fall and the stock market to rise, reversing the trend that began at the start of Monday's session.
Traders reduced their estimates for a Fed raise in May to roughly a 50-50 split, after bets for a hike climbed overnight following the OPEC+ oil supply cut agreement.
The yield on the 10-year Treasury note dropped 14 basis point from the daily highs to 3.4%. The iShares 7-10 Year Treasury Bond ETF IEF rose 0.3%.
The SPDR S&P 500 index Trust ETF SPY rose nearly 0.5% to $411 per share. The SPDR Dow Jones Industrial Average ETF DIA rose 1% to $336 per share.
Read more: 5 Economists React to Core PCE Numbers: What Will The Fed Do Next?
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