The March manufacturing index from the Institute of Supply Management (ISM) dropped to 46.2 in March from 50.5 in February over concerns about the impact of the war in Iraq.

The index had averaged 52.5 over the past year.
Jim Haughey, Newport Communications' senior economist, said the index typically drops to the very low 40s at the bottom of a recession. The Institute of Supply Management monthly survey of industrial buyers is widely followed, so the steep fall will have a depressing impact on the economy, Haughey said.
The largest decline was in the production sub-index that dropped to 46.3 from 55.4. Large declines also occurred in orders and order backlogs. However, prices rose and supplier deliveries slowed and there was little change in the sub-index for employment. While both are weaker, exports and imports remained above 50, indicating that these sectors are still growing.
This decline was expected after the weak February reports on the consumer sector. Hard industrial production data in two weeks is likely to show a much smaller decline than the index derived from a survey of buyers' opinions.
This sour report suggests that freight volume was weak again in March, possibly even falling. Watch the war on TV. Quick good news will reverse much of the damage very quickly while a longer war will deepen the problem.