NEW YORK – The overall economy grew for the twenty-third straight time, while the manufacturing sector expanded for the twenty-first time, the Institute for Supply Management reported Monday.
According to the ISM’s monthly report on business, the ISM index dipped to 60.4 in April from 61.2 in March.
Economists polled by Thomson Reuters predicted the index would slip to 59.9.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
“The recent trend of rapid growth in the manufacturing sector continued in April as the PMI registered above 60 percent for the fourth consecutive month," said Norbert J. Ore, chair of the Institute of Supply Management's manufacturing business survey committee. “The New Orders and Production Indexes continue to drive the PMI, as they have both exceeded 60 percent for five consecutive months. Manufacturing employment appears to have developed significant momentum, as the Employment Index readings for the first four months of 2011 are the highest readings in the last 38 years. Inventory growth also took place in April after two months of destocking; however, the inventory restocking would appear to be necessitated by the strong performance in new orders. While the manufacturing sector is definitely performing above most expectations so far in 2011, manufacturers are experiencing significant cost pressures from commodities and other inputs.”
The closely watched prices paid index grew to 85.5 from 85.0. The employment index was at 62.7, down from 63.0 the prior month.
The production index decreased to 63.8 from 69.0, the new orders index fell to 61.7 from 63.3; the supplier deliveries index dipped to 60.2 from 63.1; the export orders index increased to 62.0 from 56.0; and the imports index fell to 55.5 from 56.5.
The inventories index increased to 53.6 from 47.4; the customers’ inventories index grew to 40.5 from 39.5; and backlog of orders jumped to 61.0 from 52.5.
Respondents’ comments included:
"Rapidly rising raw material costs putting extreme pressure on profits." (Food, Beverage & Tobacco Products)
"Plastic resin product prices are climbing so fast that [suppliers] are attempting to increase prices on orders already accepted but not [yet] delivered." (Chemical Products)
"Customers are rebuilding safety stock levels of inventory, and also trying to buy ahead of material price increases." (Plastics & Rubber Products)
"Market continues to get stronger month over month. Recovery is faster than anticipated." (Transportation Equipment)
"Pressure from offshore suppliers continues to mount with exchange rate increases and seasonal demand for capacity." (Miscellaneous Manufacturing)
