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ISM Report: Manufacturing Falls Back Into Contraction Territory

May 1, 2024
Nine out of 16 manufacturing industries reported growth last month.

After reporting expansion following 16 months of contraction in March, the April Purchasing Manager’s Index of 49.2% indicates that manufacturing economic activity has dropped back into contraction. The April PMI is down 1.1 points compared to the previous month.

“Of the six biggest manufacturing industries, two (transportation equipment; and chemical products) registered growth in April,” says Timothy Fiore, chair of the ISM’s manufacturing business survey committee.

Although down 3.3 points, the production index remains in expansion territory with a reading of 51.3%. Anything lower than 50% represents contraction.

New orders dropped back into contraction, registering 49.1% in April. The employment index is contracting at a slower rate, up 1.2 points from March.

“Only one out of five subindexes that directly factor into the Manufacturing PMI is in expansion territory, down from two in March,” says Fiore.

The comments of the survey showcase a mixed bag of business conditions depending on the sector.

A respondent from the fabricated metal products industry writes, “Business is slowing down — it has been a gradual decline for the last several months. We are not seeing new orders at last year’s level, or at this year’s budgeted levels.”

On the other hand, a nonmetallic mineral products executive writes, “Business remained strong through the first quarter and has started strong for the second quarter.”

There are also differing responses when it comes to sales.  A transportation equipment respondent reports strong sales exceeding 2024 expectations, while another in the electrical equipment, appliances & components industry notes “a lot of volatility in sales.”

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