According to the latest Manufacturing ISM® Report On Business® from the nation’s supply executives, the manufacturing sector’s economic activity shrank in April for the sixth consecutive month after 28 months of gain.
Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee, released the following study today:
The April Manufacturing PMI® was 47.1 percent, up 0.8 percentage points from the March reading of 46.3 percent. This number represents the sixth month of recession for the total economy following a 30-month growth. At 45.7 percent, up 1.4 percentage points from the 44.3 percent reported in March, the New Orders Index remained in contractionary territory. The 48.9% reading on the Production Index is a 1.1 percentage points higher than the 47.8 percent number from March. The Prices Index was 53.2 percent, an increase of 4 percentage points from the March reading of 49.2 percent. The Backlog of Orders Index recorded 43.1 percent, down from the March reading of 43.9 percent by 0.8 percentage point. The Employment Index increased by 3.3 percentage points from March’s reading of 46.9 percent to 50.2 percent, entering growth territory. This is the lowest reading for the Supplier Deliveries Index since March 2009 (43.2%) and is 0.2 percentage points lower than the 44.8 percent registered in March. The Inventories Index decreased 1.2 percentage points from March’s value of 47.5 percent to 46.3 percent. The reading of 49.8 percent for the New Export Orders Index is 2.2 percentage points higher than the 47.6 percent recorded in March. The Imports Index increased by 2% from the 47.9% reported in March, but only marginally, to 49.9%, remaining in contraction zone.
Fiore goes on, “The U.S. manufacturing sector shrank once more, but the Manufacturing PMI® improved from the month before, showing slower shrinkage. The reading for the April composite index shows that businesses are still controlling outputs to better fit demand for the first half of 2023 and get ready for growth in the late summer/early autumn timef rame. Demand decreased once more as seen by the following indicators:
(1) New Orders Index decreased, but at a slower rate;
(2) New Export Orders Index improved;
Printing and related support activities, apparel, leather, and related products, petroleum and coal products, fabricated metal products, and transportation equipment are the five manufacturing sectors that had increase in April. Furniture & Related Products, Wood Products, Nonmetallic Mineral Products, Electrical Equipment, Appliances & Components, Plastics & Rubber Products, Chemical Products, Machinery, Primary Metals, Computer & Electronic Products, Food, Beverage & Tobacco Products, and Miscellaneous Manufacturing are the 11 industries reporting contraction in April, listed in the following order.
WHAT RESPONDENTS ARE SAYING ?
After spending a lot of money over the past three years to de-risk the supply chain because We are trying to reset with a lot of our suppliers to COVID-19 in order to decrease inventory, which has risen continuously during that time. Lead times are generally decreasing, although there are still issues with electronic components. [Products for computers & electronics]
“Although slowly, business is nevertheless declining year over year. When it’s feasible, we’re burning through existing stock while also catching up on orders. Suppliers are moving the materials along more quickly, particularly to kick off the payment process by the end of the first quarter. Employment is stable, and decisions on how many people to hire are based on the tentative second-quarter order flow. Although staffing levels in our industry are not falling, the economy as a whole is experiencing a slowdown in job openings, which is lowering the pool of potential replacement workers. We now anticipate that sales will somewhat improve in the third quarter, particularly for our metals coating for the aerospace industry. However, unexpected events, whether domestic or foreign, could quickly alter the situation. [Products Chemicals]
The daily activities are nevertheless plagued by pricing constraints. We are beginning to notice resistance in the willingness to pass through pricing to end consumers after years of inflation and aggressive pricing to our merchants. Discounting has come up in discussions. [Products of Food, Beverage, and Tobacco]
“Business is thriving. Future demand will be closely watched for any unfavourable trends. [Materials for Transportation]
Customers (and my employer) appear to have a lot of inventory. As a result, sales orders have significantly decreased during the past few months. [Machinery]
quick deliveries and supplier lead times that are shorter. Building rate reductions are already being discussed by customers for the second half of 2023. Made-to-Order Metal Products
“Business conditions are still good, with bookings and revenues exceeding expectations. Due to rising bookings and supply chain restrictions for electronic components, the backlog is expanding. Unspecified Manufacturing
“Sales remain weak, similar to 2019 prior to COVID. As much as another two years should pass before softness disappears. Electrical devices, appliances, and parts
While still not on par with 2022, business is starting to improve in the construction and automotive industries. [Products of Plastics and Rubber]
We appear to be living in a time of contradictions. Although in some ways it isn’t, business is slowing down. Some commodities’ prices are stabilising, but not all of them others. There are still some goods shortages, but some are over. Everything except when it isn’t, trucking is more common. One day there is doubt, the next there is none. Answers could come in the next few months, or they might not. Making forecasts at the present is challenging.
