ISM: Manufacturing PMI At 48.7 Percent; Overall Economy Expands Economic activity in the manufacturing sector contracted in April for the second month in a row, following a two- month expansion preceded by 26 straight months of con- traction, say the nation’s supply executives in the latest Manufacturing ISM Report On Business. The report was issued by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee: “The Manufacturing PMI registered 48.7 percent in April, 0.3 percentage point lower compared to the 49 per- cent recorded in March. The overall economy continued in expansion for the 60th month after one month of con- traction in April 2020. (A Manufacturing PMI above 42.3 percent, over a period of time, generally indicates an ex- pansion of the overall economy.) “The New Orders Index contracted for the third month in a row following a three-month period of expansion; the figure of 47.2 percent is 2 percentage points higher than the 45.2 percent recorded in March. “The April reading of the Production Index (44 percent) is 4.3 percentage points lower than March’s figure of 48.3 percent. The index returned to contraction last month af- ter two months of expansion preceded by eight months of contraction. The Prices Index remained in expansion (or
‘increasing’) territory, registering 69.8 percent, up 0.4 per- centage point compared to the reading of 69.4 percent in March. The Backlog of Orders Index registered 43.7 per- cent, down 0.8 percentage point compared to the 44.5 percent recorded in March. The Employment Index regis- tered 46.5 percent, up 1.8 percentage points from March’s figure of 44.7 percent. “The Supplier Deliveries Index indicated a continued slowing of deliveries, registering 55.2 percent, 1.7 per- centage points higher than the 53.5 percent recorded in March. (Supplier Deliveries is the only ISM Report On Busi- ness index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the econo- my improves and customer demand increases.) The Inven- tories Index registered 50.8 percent, down 2.6 percent- age points compared to March’s reading of 53.4 percent. The index indicated expansion for a second consecutive month after six months of contraction. Fiore continues, “In April, U.S. manufacturing activity slipped marginally further into contraction after expanding only marginally in February. Demand and output weak- ened while input strengthened further, conditions that are not considered positive for economic growth. Indications that demand weakened include the (1) New Orders Index continuing in contraction territory, (2) New Export Orders Index dropping sharply further into contraction, (3) Back- log of Orders Index contracting at a faster rate and (4) Cus- tomers’ Inventories Index remaining in ‘too low’ territory.
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