April report on manufacturing shows improved but mixed signals


April's report on manufacturing released by the Institute for Supply Management shows a nice increase of 1.2 percentage points to 54.9% from March's 53.7%, indicating an expansion in manufacturing for the 11th consecutive month.

Despite the good news, the report contains some of the same anomalies cause many to scratch their heads with regard to the overall economy. The new orders index held steady at 55.1% for both March and April, and the production index dropped slightly by 0.2% to 55.7% in April from March's 55.9%. Employment, which we hear so much about in manufacturing, jumped 3.6% as that index registered 54.7% in April from 51.1% in March.

The backlog of orders index fell by 2 percentage points to 55.5% in April from 57.5% in March, which most likely reflects the slowdown in production. Inventories grew by 0.5% to register 53.0%; with customer inventories remaining much too low and holding at 42% for both March and April.

Of the 18 manufacturing industries, 17 are reporting growth in April, led by apparel, leather & allied products; followed by primary metals; furniture & related products; miscellaneous manufacturing; food, beverage & tobacco products; transportation equipment; fabricated metal products; machinery; printing & related support activities. Next in the line-up was plastics & rubber products. Electrical equipment, appliances & components was the manufacturing category that brought up the rear.
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