U.S. Manufacturing PMI® at 49.2%

  • New Orders and Backlogs Contracting
  • Production Growing; Employment Contracting
  • Supplier Deliveries Faster
  • Raw Materials Inventories Contracting; Customers’ Inventories Too Low
  • Prices Increasing; Exports Contracting; Imports Growing

(Tempe, Arizona) — Economic activity in the manufacturing sector contracted in April after one month of expansion following 16 consecutive months of contraction, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

“The Manufacturing PMI® registered 49.2 percent in April, down 1.1 percentage points from the 50.3 percent recorded in March. The overall economy continued in expansion for the 48th month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index moved back into contraction territory after one month of expansion, registering 49.1 percent, 2.3 percentage points lower than the 51.4 percent recorded in March. The April reading of the Production Index (51.3 percent) is 3.3 percentage points lower than March’s figure of 54.6 percent. The Prices Index registered 60.9 percent, up 5.1 percentage points compared to the reading of 55.8 percent in March. The Backlog of Orders Index registered 45.4 percent, down 0.9 percentage point compared to the 46.3 percent recorded in March. The Employment Index registered 48.6 percent, up 1.2 percentage points from March’s figure of 47.4 percent.

“The Supplier Deliveries Index figure of 48.9 percent is 1 percentage point lower than the 49.9 percent recorded in March. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Inventories Index registered 48.2 percent, the same reading as in March.

“The New Export Orders Index reading of 48.7 percent is 2.9 percentage points lower than the 51.6 percent registered in March. The Imports Index continued in expansion territory, registering 51.9 percent, 1.1 percentage points lower than the 53 percent reported in March and February. In the last three months, the Imports Index has been at its highest levels since July 2022 (54.4 percent).”

Fiore continues, “The U.S. manufacturing sector dropped back into contraction after growing in March, the first time since September 2022 that the sector reported expansion. Although demand improvement slowed, output remains positive and inputs stayed accommodative.

“Demand remains at the early stages of recovery, with continuing signs of improving conditions. Production execution continued to expand in March, but at a slower rate of growth than in prior months. Suppliers continue to have capacity but work to improve lead times, due to their raw material supply chain disruptions. Thirty-four percent of manufacturing gross domestic product (GDP) contracted in April, up from 30 percent in March. More importantly, the share of sector GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 4 percent in April, higher than the 1-percent figure in March, but an indication of better health than the 27 percent recorded in January. Among the top six industries by contribution to manufacturing GDP in April, none had a PMI® at or below 45 percent,” says Fiore.


· “Some small indications of market improvement in China for our instruments and technology. Recovery is still slower than we had hoped, and macroeconomic uncertainty remains in Europe and the Middle East, as well as domestically in the U.S. with ongoing inflationary pressures and anticipation for the (upcoming) election.” [Computer & Electronic Products]

· “Market conditions have definitely softened. Thankfully, our backlog is strong and will get us through the year. When conditions improve as expected later this year, we will be in a good position to continue building the business. We are a manufacturer of automated packaging equipment for the food and beverage industry, and with a continued shortage of workers, our customers are requiring more and more automation.” [Machinery]

· “Business is slowing down — it has been a gradual decline for the last several months. We are not seeing new orders at last year’s level, or at this year’s budgeted levels.” [Fabricated Metal Products]

· “There has been a lot of volatility in sales. On average, our sales look flat, but the volatility is concerning.” [Electrical Equipment, Appliances & Components]

· “Business remained strong through the first quarter and has started strong for the second quarter. Commercial construction is still going well but on a regional basis, with the Southeast the strongest.” [Nonmetallic Mineral Products]

· “The major factor affecting our business is the uncertainty of the Federal Reserve’s handling of interest rates, which will affect our customers’ businesses, thereby affecting ours.” [Plastics & Rubber Products]

· “Business is stable, and orders have been consistent. We’re quoting new business for the factory, and automotive builds continue at averages but not near maximum outputs. Workforce is stable, with the turnover ratio dropping considerably. Salaries and hourly rates increasing to meet inflationary pressures.” [Primary Metals]

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