The Purchasing Managers’ Index (PMI) decreased 2.5 percentage points to 52.8% in April, from March as business strength continued to expand but at the softest levels since the fourth quarter of 2016, according to the Institute for Supply Management (ISM). A reading above 50% indicates the manufacturing economy is expanding and below 50% indicates it’s contracting.
The new orders index fell 5.7 percentage points to 51.7%, the production index decreased 3.5 percentage points to 52.3%, the employment index decreased 5.1 percentage points to 52.4%, the supplier deliveries index rose 0.4 percentage points to 54.6%, the inventories index increased 1.1 percentage points to 52.9%, and the prices index fell 4.3 percentage points to 50%.
Demand continued to rise, with the new orders index falling to the low 50s; the customers’ inventories index remained at a too low status; and the backlog of orders index improved from the previous month, according to the ISM. Consumption, or production and employment, continued to increase but at lower levels, and resulted in a combined decrease of 8.6 percentage points. Inputs, which comprise supplier deliveries, inventories and imports, were higher in April because inventory growth exceeded consumption, resulting in a 1.5-percentage point improvement in the supplier deliveries and inventories indexes. Inputs reflect a more stable business environment, and this was confirmed by the prices index at zero price growth, or unchanged.
Export orders fell for the first time since February 2016, and the PMI trade elements have been contracting. The PMI has been falling since November 2018, and the manufacturing sector is growing but at recent historic lows, according to the ISM.
The following 13 manufacturing industries expanded in April: textile mills; electrical equipment; appliances and components; miscellaneous manufacturing; printing and related support activities; chemical products; nonmetallic mineral products; plastics and rubber products; machinery; furniture and related products; food, beverage and tobacco products; computer and electronic products; paper products; and fabricated metal products. The following five industries contracted in April: apparel, leather and allied products, primary metals, wood products, petroleum and coal products and transportation equipment.