ISM: U.S. Manufacturing Activity Loses Steam

Researched by Industrial Info Resources (Sugar Land, Texas)--Manufacturing activity in the U.S. contracted in March after two consecutive months of expansion, according to a survey report by the Institute for Supply Management (ISM), as companies are seeing impacts from tariffs and uncertainty around the ongoing trade war.

"In March, U.S. manufacturing activity slipped into contraction after expanding only marginally in February," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, in a related summary of findings. "The expansion in both February and January followed 26 consecutive months of contraction. Demand and output weakened while input strengthened further, a negative for economic growth."

The ISM's Purchasing Manager's Index (PMI), which tracks 18 industry sectors in the U.S., registered 49% in March, down from 50.3% in February and 50.9% in January. Any reading under 50% indicates contraction in the manufacturing economy. The lowest reading of 2024 was 46.5%, in October, when companies were unsure of governmental policy leading up to the presidential election.

Signs that demand weakened, Fiore said, included the New Orders Index falling further into contraction; New Exports Orders Index dropping into contraction territory; and Backlog of Orders Index contracting at a faster rate. Meanwhile, output (measured by the Production and Employment indexes) also weakened in March.

"Demand and production retreated and destaffing continued, as panelists' companies responded to demand confusion. Prices growth accelerated due to tariffs, causing new order placement backlogs, supplier delivery slowdowns and manufacturing inventory growth."

The ISM survey panelists expressed how tariffs were impacting their businesses. One from the Computer & Electronic Products sector said, "Customers are pulling in orders due to anxiety about continued tariffs and pricing pressures." Another from Machinery said, "Business condition is deteriorating at a fast pace. Tariffs and economic uncertainty are making the current business environment challenging."

One Miscellaneous Manufacturing added, "Newly implemented tariffs are significantly impacting gross profits. Canada's new tariffs on U.S. goods are significantly impacting orders from that country. Quotes and sales are lower from Europe due to the threat of retaliatory tariffs."

Amid the trade war, Industrial Info is tracking more than $100 billion worth of U.S. Industrial Manufacturing Industry projects that are set to kick off in the second quarter, with much of the investment attributed to data centers.

Among these is the initial buildout of PowerHouse Data Centers' three-building data center campus in Irving, Texas, outside of Dallas, located at the site of a former warehouse. The campus will total more than 946,000 square feet, and each data center building will feature a total power load of 67 megawatts (MW). Demolition work for the initial brownfield project is expected to begin in April, and construction is expected to wrap up in 2026. PowerHouse is a subsidiary of American Real Estate Partners (McLean, Virginia). Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here to read the related project report.

South of Dallas, STACK Infrastructure (Denver, Colorado) expects construction of the first two buildings of its multi-phase Lancaster Data Center Campus will begin in May and wrap up in October. Both buildings will feature 48 MW of load capacity to support the planned 220-MW campus. Subscribers can read more information on Building 1 and Building 2.

While the Dallas-Fort Worth area is known as the country's second-largest data center market, Industrial Info also is tracking project activity in the first: Northern Virginia.

Amazon.com Incorporated (NASDAQ:AMZN) (Seattle, Washington) is looking to the second-quarter start of construction on a $550 million grassroot data center in Herndon, Virginia, to expand its Amazon Web Services (AWS) cloud data center infrastructure in the region, while Edgecore Digital Infrastructure (Denver, Colorado) is preparing for construction to begin on a $360 million brownfield data center in Sterling. Both projects are expected to wrap up by the end of 2026. Subscribers can read more information on the Herndon and Sterling projects.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).