The US Purchasing Managers Index (PMI) from the Institute for Supply Management (ISM) came at a level of 47.1, 0.8 percentage point higher than the 46.3 recorded in March, but still well below the below the key 50 mark that separates US manufacturing expansion from contraction.
That makes it the sixth consecutive months of US manufacturing decline following a 28-month period of growth.
The PMI tracks closely but not exactly with the overall US economy. The April PMI indicates a fifth month of overalll contraction after a 30-month period of expansion.
The New Orders Index remained in contraction territory at 45.7, 1.4 percentage points higher than the figure of 44.3 in March, also still well below 50 in bad news for future manufacturing activity.
It was mostly bad news in other related measures. For example, the Production Index reading of 48.9 was up 1.1-percentage point compared to March’s figure of 47, but it was below 50 too, meaning manufacturing output fell again.
The Prices Index registered 53.2, up 4 percentage points compared to the March figure of 49.2. That means companies saw slight increases in the cost of components, materials and other inputs after those prices fell in March. This index (below 50 = falling prices), was just a few months ago above 80, as inflation took off.
The Backlog of Orders Index came in at just 43.1, 0.8 percentage point lower than the March reading of 43.9, meaning order books are shrinking.
The Supplier Deliveries Index figure of 44.6 was 0.2 percentage point lower than the 44.8 recorded in March, the index’s lowest reading since March 2009 (43.2).
The Inventories Index dropped 1.2 percentage points to 46.3, again lower than the March reading of 47.5, and like other measures, also below the key 50 mark.
“New order rates remain sluggish as panelists remain concerned about when manufacturing growth will resume. Panelists’ comments registered a 1-to-1 ratio regarding optimism for future growth and continuing near-term demand declines,” commented Timothy Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee:
As always, the ISM report provides a graphic of the full PMI scores for the last 12 months, which as can be seen has the measure trending down since May or 2022, and it is now averaging just 50.1 over the past year, barely above the 50 level.
US PMI Last 12 Months
(See More Below)
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Just two of the US 18 industry sectors tracked by the PMI reported growth in March: Petroleum & Coal Products; and Transportation Equipment.
As always, there were some interesting comments from PMI survey respondents.
Said one manager from the computer & electronic products sector: “Having invested heavily to de-risk the supply chain over the last three years due to COVID-19, we are looking to reset with a number of our suppliers to reduce inventory, which has grown steadily over that period. Lead times are generally coming down, although electronic components are still a concern.”
Added another respondent in the food and beverage industry: "Pricing pressures continue to plague daily operations. After consecutive years of inflation and aggressive pricing to our retailers, we are starting to see resistance in the willingness to pass along pricing to end consumers. Discounting has entered into conversations.”
Finally, a manager in the metals sector said that “We seem to be in a season of contradictions. Business is slowing, but in some ways, it isn’t. Prices for some commodities are stabilizing, but not for others. Some product shortages are over, others aren’t. Trucking is more plentiful, except when it isn’t. There’s uncertainty one day, but not the next. The next couple of months should provide answers — or not. It’s hard to make projections at the moment.”
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