April Purchasing Managers Index Registers 52.8, a Decrease of 2.5 points from March

(Tempe, Arizona) — Economic activity in the manufacturing sector expanded in April, and the overall economy grew for the 120th consecutive month, 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 April PMI® registered 52.8 percent, a decrease of 2.5 percentage points from the March reading of 55.3 percent. The New Orders Index registered 51.7 percent, a decrease of 5.7 percentage points from the March reading of 57.4 percent. The Production Index registered 52.3 percent, a 3.5-percentage point decrease compared to the March reading of 55.8 percent. The Employment Index registered 52.4 percent, a decrease of 5.1 percentage points from the March reading of 57.5 percent. The Supplier Deliveries Index registered 54.6 percent, a 0.4-percentage point increase from the March reading of 54.2 percent. The Inventories Index registered 52.9 percent, an increase of 1.1 percentage points from the March reading of 51.8 percent. The Prices Index registered 50 percent, a 4.3-percentage point decrease from the March reading of 54.3 percent.

“Comments from the panel reflect continued expanding business strength, but at the softest levels since the fourth quarter of 2016. Demand expansion continued, with the New Orders Index softening to the low 50s, the Customers’ Inventories Index remaining at a ‘too low’ status, and the Backlog of Orders Index improving its prior month performance. Consumption (production and employment) continued to expand, but at lower levels, resulting in a combined decrease of 8.6 points.

Inputs — expressed as supplier deliveries, inventories and imports — were higher this month, primarily due to inventory growth exceeding consumption, resulting in a combined 1.5-percentage point improvement in the Supplier Deliveries and Inventories Indexes. Imports contracted during the period. Overall, inputs reflect a more stable business environment, confirmed by the Prices Index at zero price growth, or unchanged.

“Exports orders contracted for the first time since February 2016. The PMI® trade elements are in contraction territory. The PMI® has been inching down since November 2018. The manufacturing sector is expanding, but at recent historic lows,” says Fiore.

What Respondents Are Saying

“Business conditions remain largely unchanged. There is growing concern about supply chain product flow through the southern U.S. border. Price pressures remain, and inventories continue to grow in preparation for what is expected to be a growth year.” (Electrical Equipment, Appliances & Components)“Mexico/U.S. border crossing delays are slowing supplier deliveries. Tariffs are resulting in increased prices on computer components, as well as manufacturers moving out of China to countries not impacted by the tariffs. Brexit expected to result in delays on moving product through the United Kingdom.” (Computer & Electronic Products)“January and February were strong months. March softened significantly, eroding some of the [previous months’] gains.” (Chemical Products)“[We are] closely watching the Mexico border situation as well as the tariff situation.” (Transportation Equipment)“Economy is holding steady, and so are prices. Supply availability is generally OK, yet risk remains in chemicals and some longer lead-time packaging.” (Food, Beverage & Tobacco Products)“Raw material prices continue to come down, along with logistics costs. Suppliers continue to struggle to get [qualified workers], and the learning curve is leading to quality issues. That is impacting their ability to deliver. Overall, business [is] strong. Monitoring the tariffs and Mexico border issues, which are a potential threat. The China trade agreement getting completed will help with stability with suppliers and costs management.” (Machinery)“Business is steady. We expect business to grow throughout the second quarter, then level in the third and fourth quarter.” (Fabricated Metal Products)“Commodity-price uncertainty — partially driven by concerns of an economic slowdown and trade/tariff policies — has led my company to reduce its capital spend in 2019. Our 2019 capital-spend levels will be similar to 2016 levels.” (Petroleum & Coal Products)“Business seems to keep humming along.” (Plastics & Rubber Products)“Order book remains strong; future outlook is beginning to soften a little.” (Primary Metals)“Orders continue to be strong, especially from the steel industry.” (Nonmetallic Mineral Products)

 

MANUFACTURING AT A GLANCE

April 2019

Index Series Index

Apr

Series Index

Mar

Percentage

Point

Change

Direction Rate of Change Trend* (Months)

PMI®

52.8 55.3 -2.5 Growing Slower 32
New Orders 51.7 57.4 -5.7 Growing Slower 40

Production

52.3 55.8 -3.5 Growing Slower 32
Employment 52.4 57.5 -5.1 Growing Slower 31
Supplier Deliveries 54.6 54.2 +0.4 Slowing Faster 38
Inventories 52.9 51.8 +1.1 Growing Faster 16

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