Despite a drop of two points from 59.3 to 57.3, the April Institute for Supply Management Purchasing Managers Index (ISM-PMI) indicated continued solid, but slowing growth in the manufacturing sector. Of the 18 Manufacturing Industries, 17 reported growth in April. Demand remains robust, but the nation’s employment and supply chains continue to struggle- April 2018 ISM PMI, Timothy Fiore, Chair, ISM Manufacturing Business Survey Committee.
The April report noted declines in other indexes such as New Orders (down 2 points); Production Index (down 3.8 points); New Orders down 0.7 points); and he Employment index (down 3.1 points) compared to March. Prices index was up 1.2 percent from prior month, indicating the 26th consecutive month of gains.
The prices index is currently at its highest value since April 2011; 17 of 18 industry sectors reported price increases.
What is going on in manufacturing? Here are a couple of comments from some of the ISM’s respondents:
- “Business is off the charts. This is causing many collateral issues: a tightening supply chain market and longer lead times. Subcontractors are trading capacity up, leading to a bidding war for the marginal capacity. Labor remains tight and getting tighter.”
- “[The] 232 and 301 tariffs are very concerning. Business planning is at a standstill until they are resolved. Significant amount of manpower [on planning and the like] being expended on these issues.”
- “The recent steel tariffs have made it difficult to source material, and we have had to eliminate two products due to availability and cost of raw material.
PMPA’s March Business Trends Report just came in and showed a record high at 143 for sales. We look forward to seeing what our April report has in store.
Chart courtesy Calculated Risk Blog