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U.S. Manufacturing Limps Along In April

Sector’s recession continues, with both new orders and production declining, though the weak dollar provides hope in the form of export orders.

TEMPE, Ariz. – U.S. manufacturing failed to expand in April, according to an Institute for Supply Management (ISM) report.
“The manufacturing sector failed to grow in April as the PMI fell below 50 percent for the third consecutive month,” said Norbert Ore, chair of the ISM Manufacturing Business Survey Committee. “Manufacturers are in a situation where both new orders and production are slowly declining, but prices continue to rise at highly inflationary rates. Bright spots this month are the growth in the Backlog of Orders Index after six consecutive months of decline, continued strength in new export orders and a reduction in customers’ inventories.”
The PMI for April registered 48.6 percent. A reading above 50 percent indicates that the manufacturing economy is expanding. A reading below 50 percent indicates contraction.
New orders was unchanged from March at 46.5 percent. Production rose 0.4 percent to 49.1.
Employment fell 3.8 percent to 45.4 in April.
Supplier deliveries continued to slow in April, with the index rising 0.4 percent to 54. Inventories contracted, with the index rising 3.2 percent to 44.9.
Price registered 84.5 percent, its highest reading since May 2004. Backlog of Orders rose 4 percent to 51.5 in April.
New export orders increased 1 percent to 57.5. Imports of materials by manufacturers contracted, as the index rose 3 percent to 48.
“The ISM index at 48.6 percent in April confirms that the manufacturing recession continues but that the severity of the downturn is on the mild side,” said Daniel Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI.  “There is strength in aerospace, mining equipment, medical equipment and supplies, and high tech; stable growth in food; and declines in all household items, construction equipment and materials, and motor vehicles industries.
“An important counterweight preventing the manufacturing recession from becoming much worse is that the declining dollar has made United States’ exports very competitive in world markets,” Meckstroth added,  “but a worrisome factor in the marketplace is the escalating prices of oil, food , and metal commodities. “
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