U.S. manufacturing activity contracted for the sixth consecutive month in April, according to a report released by the Institute for Supply Management on Monday, although the pace of contraction slowed by more than expected.<\/p>\n
The ISM said its manufacturing PMI rose to 47.1 in April from 46.3 in March, with a reading below 50 indicating a contraction. Economists had expected the index to inch up to 46.6.<\/p>\n
“The April composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer\/early fall period,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.<\/p>\n
The increase by the headline index partly reflected slower paces of contraction in both new orders and production.<\/p>\n
The new orders index climbed to 45.7 in April from 44.3 in March, while the production index advanced to 48.9 in April from 47.8 in March.<\/p>\n
The report also said the employment index jumped to 50.2 in April from 46.9 in March, indicating job growth in the manufacturing sector following two months of contraction.<\/p>\n
On the inflation front, the ISM said the prices index surged to 53.2 in April from 49.2 in March suggesting moderate price growth following one month of marginally decreasing prices.<\/p>\n
“Factories will lose steam over the next few months as a tighter lending environment, elevated interest rates, and deteriorating goods demand bite down on production,” said Oren Klachkin, Lead U.S. Economist at Oxford Economics.<\/p>\n
He added, “Goods activity will be hit harder than services during the mild recession that we expect in H2 2023, as is typical during economic downturns.”<\/p>\n
The ISM is scheduled to release a separate report on U.S. service sector activity in the month of April on Wednesday.<\/p>\n
The services PMI is expected to rise to 53.1 in April from 51.2 in March, with a reading above 50 indicating growth in the sector. <\/p>\n