ISM Manufacturing Eases Back From 14-Year High In March

ISM manufacturing eased back from February's 14-year high, slipping 1.5 points and back below 60 to what is nevertheless an outstandingly strong 59.3 in March. And judging by sweeping strength for orders, whether new orders or export orders or backlog orders, the PMI may definitely return to 60 ground in the coming months.

Questions of capacity stress have to be raised given a second 60-plus reading for supplier deliveries which indicates lengthening times and suggests that the supply chain is increasingly jammed up. Input costs, at 78.1, are at an 8-year high. But stress isn't appearing yet in employment as the sample continues to find available applicants with the related index at a very strong 57.3, which however is down nearly 2 points from February.

This report proved its worth last year, being among the very first to report unusually strong conditions that actual data from the government is now increasingly confirming. But it's not really the strength of this sample that is most telling, rather it's the inflationary implications that will grab the most focus especially among policy makers at the Fed.