In a report released May 1, the Institute for Supply Management said its Purchasing Manager’s Index for manufacturers fell to 41.5% in April, down 7.6 points from March’s reading of 49.5%. Chair of the ISM Manufacturing Business Survey Committee Timothy Fiore noted that comments from the panel of surveyed manufacturing executives were “strongly negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus pandemic and continuing energy market recession."
This marks the second straight month of the ISM’s PMI contracting, and it is currently contracting faster than previously. New orders fell 15.1 points to 27.1%, production fell 20.2 points to 27.5%, and employment marked a tenth straight month of contraction, falling 16.3 points to 27.5%. An index of 50% indicates that the relevant metric is static, and an index of less than 50% indicates contraction.
Contraction was spread out evenly among almost every manufacturing division. Of 18 surveyed industries, only Paper Products and Food, Beverage & Tobacco Products reported growth. A comment by a surveyed food and beverage CEO cited a “fortunate increased need for packaged foods,” but also noted significant “softening” in areas that would have otherwise served food service and lodging. Fiore said that the level of contraction in the sector seen in April is “a level not seen since April 2009, with a strongly negative trajectory.”
Two new reports from IHS Markit on global and domestic U.S. manufacturing feature similar results. They also show manufacturing production at its lowest output since the 2008/2009 financial crisis. The headline figure, J.P. Morgan’s Purchasing Managers’ Index for global manufacturing, fell to 39.8 in April from 47.3, a drop of 7.5 points. The last time it was lower was in March 2009.
Meanwhile, IHS Markit’s own PMI for U.S. manufacturing fell to 36.1% in April, down 11.6 points from 48.5% in March, their steepest drop on record. According to IHS Markit’s report on global manufacturing, released today, “the vast majority of the nations covered saw their output and new orders indices drop to series lows.”
“The continued impact of the global COVID-19 pandemic caused significant disruption to industrial activity during April,” said Olya Borichevska, Global Economist at J.P. Morgan. “Output and new orders contracted at near survey-record rates as demand, international trade flows and economic sentiment were all constrained by restrictions to stop the virus spreading, company closures and shortages of material and labor.”
The main exception to the countries reporting production loss in IHS Markit’s data was China, which was the only country to report a slight increase in manufacturing production and the country with the smallest decline in new order intakes. If China’s data were excluded from the measurements of global index calculations for output, the global production interest would be the lowest on record.
This article has been updated.
