Manufacturing Survey Showdown - Who Got It Right?

US industrial production in March declined the most month-over-month since 2009. Weather again played a role as colder weather in February led to a spike in utilities output last month and this month we saw the effects of the unwinding of that spike. On a 3-month annualized basis, industrial production has fallen by -3.7%, again the lowest level since 2009.



The manufacturing component finished the first quarter on a -2.7% annualized pace. The fastest quarterly decline since 2012. What is confusing is the divergence that has developed between the available PMI surveys.  The widely followed Markit manufacturing PMI increased in January, February and March even as momentum in the hard data was slowing. However, the ISM manufacturing PMI series steadily declined throughout the first quarter. So even though the Markit surveys have become the "go to" PMI series for many economic observers, the old standby ISM series seems to have been a better indicator at least for the first quarter of this year.