NEW YORK – United States manufacturing expanded last month at the slowest pace since July, while prices paid for materials continued to accelerate amid supply constraints and tariff concerns, data from the Institute for Supply Management showed Tuesday.
Highlights of ISM manufacturing (April)
- Factory index fell to 57.3 (est. 58.5) from 59.3; readings above 50 indicate expansion Measure of production declined to 57.2 from 61; lowest level since November 2016 and biggest drop in a year
- Prices-paid gauge rose for fifth consecutive month to 79.3, the highest since April 2011, from 78.1
- Employment gauge dropped for a second month, to 54.2 from 57.3; matches lowest since May 2017
Key takeaways
The results included signs that factories are having trouble keeping up with demand. A measure of order backlogs was the highest in almost 14 years, and delivery times lengthened to match the second-longest since March 2010. The gauges for new orders and production weakened for a fourth straight month.
Even with the April decline, the main index is close to the 57.9 average since January 2017 and is consistent with solid-but- moderating activity. Trump administration policies have created both tailwinds and headwinds for manufacturers: Tax cuts are expected to underpin demand, while materials costs are accelerating, partly from supply-chain disruptions stemming from tariffs on imported steel and aluminum. Energy costs are also on the rise, with oil reaching a three-year high last month.
Economists taking note of the softer ISM factory payrolls index may nonetheless wait for its services counterpart before tweaking forecasts for April employment. The group’s non- manufacturing survey data are due Thursday, a day before the Labor Department’s jobs report.
Other details
- ISM gauge of new orders cooled to 61.2, lowest since July, from 61.9 Index of backlogs rose to 62; supplier delivery gauge advanced to 61.1, matching the second-highest level since 2010
- Measure of customer inventories rebounded to 44.3 from 42
- Export orders measure fell for second month to 57.7, lowest in 2018, from 58.7
Shobhana Chandra is a reporter for Bloomberg News.
