Manufacturing report

Economic activity in the manufacturing sector expanded in April for the ninth consecutive month, and the overall economy grew for the 12th consecutive month, according to the April report from the Institute for Supply Management.

The rate of growth as indicated by the Purchasing Managers Index is the fastest since June 2004 when the index hit 60.5%.

“Manufacturers continue to see extraordinary strength in new orders, as the New Orders Index has averaged 61.6% for the past 10 months. The signs for employment in the sector continue to improve as the Employment Index registered its fifth consecutive month of growth. Overall, the recovery in manufacturing continues quite strong, and the signs are positive for continued growth,” Norbert Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee, said in a statement.

REPORT FINDINGS
• Manufacturing continued to grow in April with the rate of growth accelerating as the PMI registered 60.4%, an increase of 0.8 percentage point when compared to March’s reading of 59.6%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

• Seventeen of the 18 manufacturing industries are reporting growth in April, in the following order: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Wood Products; Petroleum & Coal Products; Plastics & Rubber Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Computer & Electronic Products; Primary Metals; Furniture & Related Products; Chemical Products; Printing & Related Support Activities; Paper Products; and Food, Beverage & Tobacco Products. No industries are reporting contraction in April.

• Ore noted: “The past relationship between the PMI and the overall economy indicates that the average PMI for January through April (58.7 percent) corresponds to a 5.6 percent increase in real gross domestic product (GDP). In addition, if the PMI for April is annualized, it corresponds to a 6.2 percent increase in real GDP annually."

• ISM’s New Orders Index registered 65.7% in April, 4.2 percentage points higher than the 61.5% registered in March. This is the 10th consecutive month of growth in the New Orders Index. A New Orders Index above 50.2%, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).