PMI at 54.8%; New Orders, Production and Employment Growing

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Economic activity in the manufacturing sector expanded in April, and the overall economy grew for the 95th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: "The April PMI® registered 54.8%, a decrease of 2.4 percentage points from the March reading of 57.2%. The New Orders Index registered 57.5%, a decrease of 7 percentage points from the March reading of 64.5%. The Production Index registered 58.6%, 1 percentage point higher than the March reading of 57.6%. The Employment Index registered 52%, a decrease of 6.9 percentage points from the March reading of 58.9%. Inventories of raw materials registered 51%, an increase of 2 percentage points from the March reading of 49%. The Prices Index registered 68.5% in April, a decrease of 2 percentage points from the March reading of 70.5%, indicating higher raw materials prices for the 14th consecutive month, but at a slower rate of increase in April compared with March. Comments from the panel generally reflect stable to growing business conditions; with new orders, production, employment and inventories of raw materials all growing in April over March."

Of the 18 manufacturing industries, 16 reported growth in April in the following order: Electrical Equipment, Appliances & Components; Textile Mills; Nonmetallic Mineral Products; Furniture & Related Products; Plastics & Rubber Products; Fabricated Metal Products; Printing & Related Support Activities; Machinery; Paper Products; Chemical Products; Food, Beverage & Tobacco Products; Primary Metals; Miscellaneous Manufacturing; Computer & Electronic Products; Petroleum & Coal Products; and Transportation Equipment. The only industry that reported contraction in April compared to March is Apparel, Leather & Allied Products.

April 2017 Manufacturing Index Summaries

PMI

Manufacturing expanded in April as the PMI registered 54.8%, a decrease of 2.4 percentage points from the March reading of 57.2%, indicating growth in manufacturing for the eighth consecutive month. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

A PMI above 43.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the April PMI indicates growth for the 95th consecutive month in the overall economy and the eighth straight month of growth in the manufacturing sector. Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through April (56.4%) corresponds to a 4.1% increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for April (54.8%) is annualized, it corresponds to a 3.6% increase in real GDP annually."

New Orders

ISM's New Orders Index registered 57.5% in April, which is a decrease of 7 percentage points when compared to the 64.5% ent reported for March, indicating growth in new orders for the eighth consecutive month. A New Orders Index above 52.3%, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

Sixteen of 18 industries reported growth in new orders in April, listed in the following order: Furniture & Related Products; Nonmetallic Mineral Products; Textile Mills; Apparel, Leather & Allied Products; Machinery; Fabricated Metal Products; Miscellaneous Manufacturing; Printing & Related Support Activities; Chemical Products; Primary Metals; Plastics & Rubber Products; Transportation Equipment; Paper Products; Petroleum & Coal Products; Computer & Electronic Products; and Food, Beverage & Tobacco Products. No industry reported contraction in new orders in April compared to March.

Production

ISM's Production Index registered 58.6% in April, which is an increase of 1 percentage point when compared to the 57.6% reported for March, indicating growth in production for the eighth consecutive month. An index above 51.4%, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 17 industries reporting growth in production during the month of April — listed in order — are: Furniture & Related Products; Nonmetallic Mineral Products; Textile Mills; Apparel, Leather & Allied Products; Plastics & Rubber Products; Machinery; Primary Metals; Miscellaneous Manufacturing; Paper Products; Printing & Related Support Activities; Fabricated Metal Products; Chemical Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Petroleum & Coal Products. No industry reported a decrease in production in April compared to March.

Employment

ISM®'s Employment Index registered 52% in April, a decrease of 6.9 percentage points when compared to the March reading of 58.9%, indicating growth in employment in April for the seventh consecutive month. An Employment Index above 50.5%, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, the 12-reporting employment growth in April — listed in order — are: Electrical Equipment, Appliances & Components; Furniture & Related Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Paper Products; Plastics & Rubber Products; Fabricated Metal Products; Computer & Electronic Products; Primary Metals; Machinery; and Miscellaneous Manufacturing. The four industries reporting a decrease in employment in April are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Transportation Equipment; and Chemical Products.

About Institute for Supply Management

Institute for Supply Management (ISM) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business, its highly regarded certification programs and the newly launched ISM Mastery Model. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM Report On Business is posted on ISM's website on the first business day of every month after 10:00 a.m. (ET).