Manufacturing index in April mixed, but positive overall

The Institute for Supply Management's PMI Index drops slightly in April to 50.8% as production and new orders remain strong while employment and inventories are contracting.
By Chris Vavra, production editor, CFE Media May 2, 2016

The Institute for Supply Management's PMI Index drops slightly in April to 50.8% as production and new orders remain strong while employment and inventories are contracting. Image courtesy: CFE MediaThe Institute for Supply Management’s (ISM) Purchasing Manufacturers’ Index (PMI) was a bit of a mixed bag, but the industry as a whole expanded for the second straight month. The index registered 50.8% in April, which is down from March’s 51.8%, but the overall economy registered growth for the 83rd consecutive month.

"Manufacturing registered growth in April for the second consecutive month, as 15 of our 18 industries reported an increase in new orders in April (up from 13 in March), and 15 of our 18 industries reported an increase in production in April (up from 12 in March)," said Bradley Holcomb, chairman of the Institute for Supply Management’s Manufacturing Business Survey Committee, which calculates the PMI each month.

The new orders index decreased 2.5 percentage points to registered 55.8% and the production index registered dropped 1.1 percentage points to 54.2%. The employment index increased 1.1 percentage points to 49.2%, but it still remains in contraction overall. Inventories of raw materials decreased 1.5 percentage points to 45.5%.

Eleven of the 18 manufacturing industries reported growth in April, but there remains some concerns about how quickly the industry is growing. Among their comments:

  • "We are still running at capacity. New CapEx for $30 million to increase capacity, but will not be online until 2017." (Food, Beverage and Tobacco Products)
  • "Remaining a bit sluggish overall although showing signs of a pickup in some areas." (Chemical Products)
  • "While oil prices have recovered slightly, the industry as a whole continues to struggle greatly." (Computer and Electronic Products)
  • "Steel prices are increasing, but it is supply-side driven. General economy is plugging along with no big changes. Kind of lackluster." (Fabricated Metal products)
  • "Auto industry is still going strong." (Machinery)
  • "Sales are firming at the reduced levels we’ve seen this year. We think we have hit a bottom." (Transportation Equipment)
  • "Business conditions are stable. Sales and production rates are steady to improving." (Miscellaneous Manufacturing)
  • "Activity increasing as we move to our busy season." (Printing and Related Support Activities)
  • "Market is starting to pick up as expected." (Wood Products)

Chris Vavra is production editor, CFE Media, cvavra@cfemedia.com.

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