Manufacturing Activity Continues to Slow in April

Economic activity in the manufacturing sector declined in April for the ninth consecutive month even though the GDP registered an unexpected increase of 2.0% in the first quarter according to the latest figures from the Manufacturing NAPM Report on Business. The April PMI rose slightly to 43.2%, below the consensus figure of 44.0, and over the breakeven point of 42.7.

Economic activity in the manufacturing sector declined in April for the ninth consecutive month even though the GDP registered an unexpected increase of 2.0% in the first quarter according to the latest figures from the Manufacturing NAPM Report on Business. The April PMI rose slightly to 43.2%, below the consensus figure of 44.0, and over the breakeven point of 42.7. Although the increase above 43% suggests that the economy is no longer contracting, NAPM indicates that the manufacturing sector remains very weak.  

According to Norbert J. Ore, C.P.M., chair of the National Association of Purchasing Management's Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "The manufacturing sector continued to contract in April. As the sector is struggling to gain a foothold that will reverse the decline, it is encouraging that pricing pressures appear to be moderating and inventory liquidation has accelerated. April appears to be a soft start for the second quarter when viewed across the indexes – particularly in Production as well as Employment, New Export Orders, and Imports."

The production indices generally indicated some improvement in April, although all remained somewhat weak.  It also appears that the manufacturing sector has undertaken a successful inventory correction. With both New Orders and Backlog of Orders still below 50%, there is no indication of a quick improvement in manufacturing activity, however. New Orders grew by 3.6%, the second straight monthly increase after six months of decline. Backlog of Orders was unchanged, failing to grow for the twelfth consecutive month in April. The Production Index rose a meager in 0.1% in April to 42.9 percent. This is the fifth consecutive month, and seventh in the last nine months, that the index has been below the 50% mark. 

Among other sub-indexes, New Export Orders declined from 50.6% in March to 47.3% in April. Only three of the twenty sub-industries in manufacturing reported growth: chemicals, food and miscellaneous. 

Series April March
PMI 43.2 43.1
Production 42.9 42.8
New Orders 45.9 42.3
Backlog of Orders 43.5 43.5
Supplier Deliveries 47.4 48.3
Inventories 39.6 44.2
Employment 38.1 40.4
Prices Paid 48.9 49.9
New Export Orders 47.3 50.6
Imports 47.2 49.1

The next NAPM Report on Business will be released on June 1, 2001.

- - - - - - - - - - 
Read the latest report from the National Association of Purchasing Management.

More