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.
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