U.S. ISM Manufacturing Index (March 2026)

ISM Manufacturing Index Improved Slightly in March, While Price Pressures Surged

• The ISM Manufacturing Index edged up modestly in March to 52.7 from 52.4, not far from the market consensus of 52.3. Despite lingering headwinds, the headline index remained in expansionary territory for a third consecutive month, marking the strongest run since mid-2022.
• Growth across industries broadened slightly, with 13 of 18 manufacturing sectors reporting expansion. Roughly 16% of manufacturing GDP remained in contraction, a slight improvement from 21% in February and a substantial improvement from late 2025.
• Among the key indicators, new orders eased by 2.3 points to 53.5, while production strengthened by 1.6 points to 55.1, leaving both components still comfortably above the 50-point expansion threshold. The employment index remained in contraction, showing little change in March. 
• Trade related indicators were mixed. Imports pulled back but remained in expansionary territory (-2.3 points to 52.6), while exports edged slightly lower, tipping into contractionary territory (-0.4 points to 49.9).
• Price pressures continued to build last month. The price-paid index surged to 78.3 – a strong pickup from under 60 at the end of 2025 and its highest reading since June 2022. The supplier deliveries index also moved higher, with this measure up almost 10 points over the last four months to 58.9 – also its highest level since mid-2022 (higher values indicate slower deliveries).
• Two thirds of survey comments in March were negative overall, with one-fifth of these comments citing tariffs and two-fifths citing the conflict in the Middle East. One such comment in the Food & Beverage category noted: “Current Middle East unrest is already starting to impact business operations by increasing lead times, costs, container delays and the like."

Key Implications

• The March ISM report reinforces the view that the U.S. manufacturing sector has regained some footing after a prolonged downturn, but that the expansion remains fragile. While the headline index improved modestly and activity broadened across industries, a still weak hiring backdrop, combined with early signs of softening – including cooling momentum in new orders and intensifying price pressures – suggests that the recent upswing may pause rather than build further. 
• Rising cost pressures stand out as the report’s dominant warning signal. The sharp surge in the prices-paid index – alongside a pronounced slowdown in supplier deliveries – points to mounting supply side stress, driven by higher energy and other input costs, and growing logistical disruptions tied to the Middle East conflict. With prices now back to levels last seen during the 2022 inflation surge, margin pressures and uncertainty are likely to restrain expansion plans in the near term. Moreover, the strengthening inflation signals will keep the Federal Reserve cautious, reinforcing the view that there's unlikely to be any further rate relief in the near term.

Disclaimer

This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.