The Institute for Supply Management’s latest “Manufacturing ISM Report on Business” does not paint a pretty picture for domestic textile and apparel factories. The Tempe, Arizona-based group’s report, released Wednesday, revealed that economic activity expanded in March at the slowest rate in nearly two years, citing the West Coast ports crisis as a contributing factor.
Based on data compiled from purchasing and supply executives nationwide, the ISM’s index of national factory activity fell to 51.5 from 52.9 the previous month. The weak reading was less than economists had forecast and the lowest since May of 2013.
“Comments from the panel refer to continuing challenges from the West Coast port issue, lower oil prices having both positive and negative impacts depending upon the industry, residual effects of the harsh winter, higher costs of healthcare premiums and challenges associated with the stronger dollar on international business,” said Bradley J. Holcomb, chairman of the ISM’s Manufacturing Business Survey Committee.
Textile mills and apparel makers were among the industries that said business contracted in March. Both reported paying lower prices for raw materials, yet inventory and production at clothing factories was down while textile mills upped their imports.
In addition, companies reported a slowdown in new orders and exports, partly reflecting the dollar’s strong exchange rate, while a decline in employment further proved that economic growth stalled significantly last month.
Not to mention, the nine-month West Coast port labor dispute — resolved in February — is still disrupting supply chains for textile mills, which reported slower supplier deliveries as dockworkers continue to clear the backlog.
It’s not all doom and gloom, however. Holcomb noted that warmer weather and a recent jump in consumer confidence indicates “a distinct possibility” for an upswing in domestic manufacturing going forward.