The Institute for Supply Management (ISM) released its Purchasing Managers Index (PMI) for manufacturing this morning, with the sector continuing to expand rapidly, despite a slight decrease. The PMI fell from 61.2 in March to 60.4 in April, beating expectations. As the chart below shows, the sector has improved substantially since bottoming out in late 2008. In addition, a PMI over 42.5 indicates expansion in the sector, and the PMI for manufacturing has now exceeded that figure for 21 consecutive months.
With that said, manufacturing production has cooled somewhat in the past couple months, mainly due to rising material costs, supply chain disruptions, and higher energy prices. The rate of growth of production, new orders, and employment fell slightly, with inventories up. The gap between new orders and inventories – which are a proxy for future production – narrowed, but still indicates positive growth in the months ahead.
In addition, exports remain a source of strength for manufacturing. New export orders rose from 56 to 62 in April, the 22nd consecutive month of growth.
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