U.S. manufacturing growth slowed in April to its lowest level in nearly two years, the Institute for Supply Management (ISM) reported on May 2. The Tempe, Ariz.-based group's manufacturing activity index was 53.3% last month, 1.9 percentage points below its March level of 55.2%. Economists generally expected a figure of 55% in April.
A figure above 50% indicates that the manufacturing sector of the U.S. economy generally is growing; a figure below 50% signals the sector is contracting.
New orders for manufacturers continued to grow in April, although at a slower rate, falling 3.4 percentage points to 53.7% last month from 57.1% in March. Employment growth slowed during April, slipping one percentage point to 52.3% from 53.3%. Manufacturers' inventories, which had been growing, started to contract in April.
"The trend is definitely toward a slower pace of growth, and that should relieve some of the pricing pressure that the sector has experienced during 2004 and year-to-date in 2005," says Norbert J. Ore, chair of ISM's manufacturing business survey committee. "Declines in inventories indicate that manufacturers are adjusting to slower growth in new orders."
