April ISM Report: Manufacturing PMI Holds at 52.7%, Extends Expansion

The ISM (Institute for Supply Management) Manufacturing PMI remained in expansion territory for the fourth straight month in April. The PMI registered 52.7%, the same reading as the previous month, indicating growth at the same rate when compared to March.

“Of the five subindexes that make up the PMI, the new orders and supplier deliveries indexes indicated faster growth compared to the previous month, the production index grew at a slower rate and the employment and inventories indexes remained in contraction,” says Susan Spence, chair of the ISM’s manufacturing business survey committee. A reading below 50% represents contraction.

The April new orders index grew 0.6 points to 54.1%. The production index fell 1.7 points to 53.4% and the employment index fell 2.3 points to 46.4%.

The prices index jumped 6.3 points to 84.6% in April. “As was the case in March, the prices index reading continues to be driven by (1) increases in steel and aluminum prices that impact the entire value chain, (2) tariffs applied to many imported goods and now (3) increases in petroleum-based products as a result of the Middle East conflict,” says Spence.

13 manufacturing industries reported growth last month:

• Textile mills
• Nonmetallic mineral products
• Primary metals
• Plastics & rubber products
• Miscellaneous manufacturing
• Transportation equipment
• Machinery
• Electrical equipment, appliances & components
• Paper products
• Fabricated metal products
• Computer & electronic products
• Chemical products
• Furniture & related products

“Of the six largest manufacturing industries, four (transportation equipment; machinery; computer & electronic products; and chemical products) expanded in April,” says Spence.

Several respondents in the comments of the survey continue to express price concerns brought on by tariffs and the conflict in Iran.

“Demand for manufactured goods is trending higher versus last year; however, geopolitical uncertainty and rising oil and diesel prices continue to weigh on demand,” writes a respondent from the transportation equipment sector. “Many customers are exercising caution and remain in a wait-and-watch mode.”

Another respondent in the chemical products sector writes, “Revenues are very strong. However, price increases are similar to a few years ago with the supply chain crisis. All imports from China are up 15% to 25%, which is impossible for us to absorb or to fully pass along. Our suppliers in China are telling us that oil is at an all-time high, which is putting huge challenges on their cost structures.”