PMI at 53.9%
New Orders, Production Growing
Supplier Deliveries Slowing
Employment, Inventories Decline
Exports, Imports Growing
(Tempe, Arizona) -- Economic activity in the manufacturing sector grew for the third consecutive month in April. The overall economy grew for the sixth consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "Though the rate has slowed, a third consecutive month of growth in the manufacturing sector is certainly encouraging. The New Orders Index lost some momentum, but it is still strong enough to drive sector growth in the next several months."
ISM's Backlog of Orders Index indicates that order backlogs grew for the third consecutive month. ISM's Supplier Deliveries Index reflects slower deliveries for the fourth consecutive month. Manufacturing employment continued to decline in April as the index remained below the breakeven point (an index of 50 percent) for the 19th consecutive month. ISM's Prices Index is above 50 percent as manufacturers experienced higher prices for the second consecutive month. New Export Orders grew in April for the fourth consecutive month. April's Imports Index accelerated slightly registering growth for the fifth consecutive month.
Comments from supply executives varied greatly by industry. Electronic industry respondents continue to see improvement, while Primary Metals appears to be benefiting from the recently imposed tariffs. On the downside, the Fabricated Metals and Industrial Equipment sectors continue to be concerned about paying higher metals prices. Chemicals and Paper are not yet seeing significant recovery as prices continue to slide.
ISM's PMI is 53.9 percent in April, a decrease of 1.7 percentage points from the 55.6 percent reported in March. ISM's New Orders Index declined from 65.3 percent in March to 59 percent in April. ISM's Production Index rose 0.2 percentage point from 57.8 percent in March to 58 percent in April. The ISM Employment Index is at 46.7 percent for April, a decrease of 0.8 percentage point when compared to the 47.5 percent reported in March.
ISM's Supplier Deliveries Index registered 53.7 percent compared to 53.1 percent in March. ISM's Inventories Index is 42.9 percent. ISM's Customer Inventories Index for April is at 40.5 percent, a slight increase when compared to March's 40 percent, indicating less inventory in the supply chain. ISM's Prices Index in April is 60.3 percent, an increase of 8.4 percentage points from March's 51.9 percent. ISM's Backlog of Orders Index declined from 62.5 percent in March to 56 percent in April.
ISM's New Export Orders Index registered 51.9 percent, up 0.9 percentage point from March's 51 percent. Imports of materials by manufacturers grew, as ISM's Imports Index is 55.7 percent for the month, up from March's 53.4 percent.
"The overall picture shows growth in manufacturing activity during April and a good beginning for the second quarter," added Ore. "The PMI indicates a third consecutive month of significant growth. This month the Prices Index continued to make a strong move upward, indicating pricing power in some commodities. Energy is still a concern for many buyers. Textiles, Primary Metals, and Instruments & Photographic Equipment appear very aggressive in hiring at this point."
Of the 20 industries in the manufacturing sector, 18 industries reported growth: Textiles; Glass, Stone & Aggregate; Petroleum; Furniture; Primary Metals; Fabricated Metals; Rubber & Plastic Products; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Transportation & Equipment; Instruments & Photographic Equipment; Wood & Wood Products; Tobacco; Printing & Publishing; Electronic Components & Equipment; Chemicals; Paper; Food; and Industrial & Commercial Equipment & Computers.
"Steel is the only commodity reported in short supply. Commodities reported up in price are: Aluminum, Aluminum Extrusions; Diesel Fuel; Fuel, Galvanized Steel, High Density Polyethylene; Lumber; Natural Gas, Oil, Paper, Plastics, Polyethylene, Resins, Solvents, Steel, and Styrene. The commodities reported down in price are: Caustic Soda, Chemicals; Corrugated Containers, and Paper," Ore stated.
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