Tariffs Drive Raw Material Prices to 7-Year High

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U.S. factories expanded at a robust yet slightly slower pace in March and tariffs helped drive a measure of raw-material prices to an almost seven-year high, data from the Institute for Supply Management showed on April 2.

This story by Shobhana Chandra appeared in Industry Week.

Factory index eased to 59.3 from 60.8. The measure of new orders fell to 61.9, the lowest since August, from 64.2, and the prices-paid index rose for a fourth straight month to 78.1, the highest since April 2011, from 74.2. The employment gauge declined to 57.3 from 59.7.

A measure of customer inventories dropped to the lowest since July 2011 and a gauge of backlogs held at an almost 14-year high. Together that indicates factories continue to have trouble keeping up with demand from consumers and businesses while paying ever-higher prices for raw materials.

Some of the rising costs were attributed to President Donald Trump’s tariffs on imported steel and aluminum, with one respondent in the machinery sector saying “panic buying” is also resulting in shortages for some customers. Timothy Fiore, chairman of the ISM manufacturing survey committee, said about 32 percent of comments related to tariff concerns, and businesses began stocking up in response to the tariff announcement.

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