CareCredit - Women's Health April 2024

Manufacturing Activity Climbs After 16-Month Contraction

Real-Time Payments to Replace Checks, ACH in Manufacturing

Manufacturing activity in the United States rose in March for the first time in more than a year.

The Institute for Supply Management’s monthly report on business, released Monday (April 1), showed output growth of 54.6%, the strongest reading since June 2022.

“Demand remains at the early stages of recovery, with clear signs of improving conditions,” said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee, in a press release. “Production execution surged compared to January and February, as panelists’ companies reenter expansion.”

Suppliers still have capacity but are displaying signs of struggle, due largely to their raw material supply chains, he added in the release. The report showed that 30% of manufacturing gross domestic product (GDP) contracted in March, down from 40% the month before.

“More importantly, the share of sector GDP registering a composite [purchasing managers’ index] calculation at or below 45% — a good barometer of overall manufacturing weakness — was 1% in March, the same as in February, but categorically healthier than the 27% recorded in January,” Fiore said in the release.

Of the six largest manufacturing industries, four — food, beverage and tobacco products; chemical products; fabricated metal products; and transportation equipment — showed growth last month, the report said.

Meanwhile, PYMNTS wrote last year that the manufacturing sector’s growth aspirations speak “volumes” to the need for better payment practices and technology.

“Even if pricing is pressured, getting cash into the coffers more quickly means that cash flow visibility and transparency are improved, and thus the financial positioning of these ‘old economy’ firms improves as well,” the report said.

Research included in the PYMNTS Intelligence report “Corporate Changes in Payment Practices: Manufacturing Companies Embrace Real-Time Payments” showed that 61% of firms said the ability to send real-time payments is “important.” Sixty-five percent said the same about getting those payments in real time.

“The latter data illuminates the desire for improved cash flows, which can then be deployed to buy more inventory, hire more staff or expand property to tackle new markets and growth,” the report said.

As many as 4 in 10 manufacturers said real-time payments are among the key priorities for their companies. There’s room for real-time payments to gain a wider berth, as 15% of outbound and 14% of inbound B2B transactions by manufacturers are conducted across real-time conduits.