PMI Index: Steady, but slower manufacturing growth

Index declines for third straight month, but stays above growth threshold


Manufacturing continues its slow growth in April, according to the monthly PMI Index from the Institute of Supply Management. While April’s 50.7% level was above the 50% threshold for growth, it was the third straight month of slower growth after the index peaked at 54.2% in February. Still, the index has been at or above the break-even point for all but one month in the last year, indicating a consistent if unspectacular growth rate.

Of the 18 reporting industry segments, 14 reported growth for the month.  “The PMI registered 50.7% a decrease of 0.6 percentage points from March's reading of 51.3% indicating expansion in manufacturing for the fifth consecutive month, but at the lowest rate of the year,” said Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “Comments from the panel indicate a range of strong/steady growth, to flat/declining volumes, depending upon the particular industry.”

Among the comments from industry executives:

"Business can be described as flat at best." (Food, Beverage & Tobacco Products)

"Production is still strong; several new projects to support alternative energy." (Primary Metals)

"Slight uptick in business, but overall continuing slowdown in defense due to budget/sequester." (Computer & Electronic Products)

"Automotive demand remains firm." (Fabricated Metal Products)

"Business continues at a steady pace." (Machinery)

"General business conditions and industrial markets remain strong." (Transportation Equipment)

The PMI was above the 42.2% mark for overall economic growth for the 47th consecutive month, pointing to manufacturing’s impact on overall economic growth. “The past relationship between the PMI and the overall economy indicates that the average PMI for January through April (52.3%) corresponds to a 3.2% increase in real gross domestic product on an annualized basis,” Holcomb said. “In addition, if the PMI for April (50.7%) is annualized, it corresponds to a 2.7% increase in real GDP annually.”

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