The manufacturing sector slowed its advance during April, according to data issued by the Institute for Supply Management (ISM), the Tempe, Arizona-based trade group, which compiles monthly figures on this key economic sector.
In all, manufacturing, which had contracted in the Chicago area last month, according to data issued yesterday, actually moved a bit ahead in April on a nationwide basis, but the advance slowed to a barely expansionary reading of 50.7. That score was just slightly above the 50.0 line, which separates an expanding industrial sector from one that is contracting. The latest result also was below the March level of 51.3. Expectations had been for a slowing to 50.9. Thus, this was a minor disappointment. But the latest result was consistent with many of the recent reports, which have been showing a lessening in economic growth.
Still, in a sign of potential resiliency, the forward-looking new orders component nudged up to 52.3 from 51.4 in March. There also was a gain in the level of production, which rose from 52.2 to 53.5 last month.
On the other hand, employment, which is a closely watched component, eased rather materially last month, registering just a scant rate of growth of 50.2. A month ago, this sector had come in at 54.2. This latest deceleration in employment was consistent with a survey on private-sector job creation issued earlier this morning, which showed that such jobs rose by a less-than-expected 119,000 in April. These findings will be followed in two days by the Labor Department's issuance on non-farm payrolls and the unemployment rate for the country at large. A payroll gain of 150,000 and a stable jobless rate of 7.6% are the consensus expectations.
Meanwhile, this was the fifth straight month in which manufacturing had ticked higher across the country, after a one-month slippage to just below the 50.0 level. Also, on Friday, the companion report from the ISM will be released on nonmanufacturing activity. Here, as well, a lesser rate of improvement is the expectation for the key services sector.
Getting back to the manufacturing survey, of the 18 industries chronicled, 14 showed improvement last month, led by furniture and related products. Moreover, in the primary metals area, respondents noted that production is still strong, with several new projects under way that support alternative energy.
Finally, the 50.7 reading was closer to the low end of the 12-month range, which has varied from 54.2 to 49.9. It also was modestly below the average for the 12 months of 51.4. So, while this report was clearly not a game changer, it must be viewed as somewhat disappointing, and should lend further weight to the Federal Reserve's likely decision, following the conclusion this afternoon of its latest FOMC meeting, to continue its monetary easing ways.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.