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 timeframe. 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; (3) Customers’ Inventories Index entered the low end of “too high” zone; and (4) Consumer Price Index. negative for projected production, and (4) the Backlog of Orders Index is still contracting strongly. The Production and Employment indices both showed positive output/consumption, which had a combined positive influence on the Manufacturing PMI® computation of 4.4 percentage points. The Production Index registered a sixth month in negative territory, albeit at a somewhat slower rate, while the Employment Index showed a modest expansion after two months of decline. In spite of conflicting opinions about when significant growth would resume, panellists’ statements continue to show that their organisations are actively increasing and decreasing their headcounts. Future demand growth is still being accommodated by inputs, which are represented by supplier deliveries, stocks, prices, and imports. Faster deliveries were indicated by the Supplier Deliveries Index, and inventories declined more as the panellists’ businesses shrank. manage the exposure of the inventory. After one month of mildly declining prices, the Prices Index returned to ‘rising’ territory at a moderate level.”New order rates are still weak, and the panellists are still uncertain as to when manufacturing growth will pick up. An equal number of panellists expressed confidence for future growth and continued short-term decreases in demand. As a result of panellists’ remarks supporting shorter lead times for their most significant orders, supply networks are ready and eager for expansion. Given that businesses are still trying to reduce backlogs and past-due deliveries, prices are still unstable and demand for the future is uncertain. Since March, the percentage of manufacturing’s GDP that is contracting has increased to 73%. Fewer industries, however, experienced a significant contraction; the percentage of manufacturing GDP with a composite PMI® estimate at or below 45 percent, a reliable indicator of manufacturing’s overall decline, was 12 percent in April as opposed to 25 percent in March, according to Fiore.
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 PERSONS ARE SAYING IN REPLY
“After spending a lot of money over the past three years to de-risk the supply chain due to COVID-19, we are looking to reset with a number of our suppliers to reduce inventory, which will save us money,” has increased consistently 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. Currently, we anticipate that business will improve in the third quarter, particularly in our coatings for metals used in the aerospace sector. However, unexpected events, whether domestic or foreign, could quickly alter the situation. [Products Chemicals]
