U.S. Manufacturing Growth Slows Amid Price Pressures

May 2, 2011
Growth in new orders, production, employment and supplier deliveries slowed.

The manufacturing sector expanded in April for the 21st month running but the pace slowed as companies faced higher prices for material inputs, according to report released on May 2 by The Institute for Supply Management.

The group's manufacturing index, based on a survey of purchasing managers, stood at 60.4% in April, down from 61.2% in March.

It was the fourth consecutive month of growth above 6% on the purchasing managers index for manufacturing, the sector driving the US economic recovery from the worst recession in decades.

Growth in new orders, production, employment and supplier deliveries slowed.

"While the manufacturing sector is definitely performing above most expectations so far in 2011, manufacturers are experiencing significant cost pressures from commodities and other inputs," said Norbert Ore, head of the ISM's manufacturing committee.

Prices on the PMI jumped to 85.5% in April from 85% in March. That was the highest price reading since July 2008, when the index registered 88.5% as crude oil prices hit a record $147 a barrel.

"Business conditions in manufacturing are booming," said Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI. "United States manufacturing continues to recover from an exceptionally severe recession that has created pent up demand for consumer durables, particularly motor vehicles, and business equipment. Rapidly rising factory utilization rates have propelled industrial equipment and machinery purchases and the rapid pace of technological change has benefited from high-tech spending. In addition, U.S. manufacturers are seeing strong export demand from emerging economies whose growth greatly exceeds that of the advanced countries. It is clear from today's report that the few things holding back domestic manufacturers are skyrocketing commodity prices, selective commodity shortages, sluggish residential construction and declining non-residential construction."

Copyright Agence France-Presse, 2011

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