The Institute for Supply Management’s (ISM) manufacturing purchasing managers’ index (PMI) continued to move higher, recovering from weather-related softness in January. The overall PMI rose from 53.7 in March to 54.9 in April, its highest point so far in 2014. The sector continued to see modest growth in new orders (unchanged at 55.1), production (down slightly from 55.9 to 55.7), and exports (up from 55.5 to 57.0). One real positive was the increased pace of hiring, with the employment index jumping from 51.1 to 54.7.
The sample comments support the view that manufacturing activity has rebounded in the spring months. A fabricated metal products respondent said, “We think there is pent-up demand waiting for weather to break.” Several others focused on improvements in sales, employment, and export growth. Yet, the survey participants also noted some challenges, including difficulties hiring skilled workers, weak demand from Europe, and worries stemming from political turmoil in Russia and the Ukraine.
Overall, manufacturing confidence is rising, building off of uncertainties earlier in the year. Still, it is important to note that activity remains below the torrid pace seen at the end of last year. The ISM PMI values averaged 56.3 in the second half of 2013, with new orders and output averaging 61.8 and 62.6, respectively. As such, there is still room for improvement. Fortunately, manufacturing demand and production appear to be moving back in the right direction.
Chad Moutray is the chief economist, National Association of Manufacturers.
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