Markit: U.S. Manufacturing Activity Grew at the Slowest Pace since September 2009

U.S. manufacturing activity grew at the slowest pace since September 2009, according to preliminary figures from Markit. The Markit Flash U.S. Manufacturing PMI decreased from 51.5 in March to 50.8 in April. In general, the strong dollar and weaknesses abroad have dampened international demand and overall sentiment over the course of the past year. Manufacturing activity has decelerated significantly over the past 12 months, with the main PMI number down from 54.2 in April 2015. In this report, output (down from 51.4 to 50.3) and hiring (down from 52.1 to 50.2) each pulled back to a near-standstill, with exports (down from 50.0 to 48.5) contracting for the second time in the past three months. On the other hand, new orders (down from 52.8 to 52.0) continued to expand modestly, but with some easing for the month.

As such, this report stands in sharp contrast to the better-than-expected sentiment seen in the competing data from the Institute for Supply Management (ISM). In that release, new orders and output each grew surprisingly strong in March, lifting its manufacturing PMI value above 50 for the first time since August. It provided some encouragement after months of softness, even as other economic data – including this one from Markit – continue to suggest ongoing challenges.

Meanwhile, the Markit Flash Eurozone Manufacturing PMI declined from 51.6 in March to 51.5 in April, with growth remaining somewhat subdued. The February level (51.2) was a 12-month low, with this latest figure not far from that level. The headline index remained down from 53.2 in December, which had been its fastest pace since April 2014. The underlying data in April were mixed. On the positive side, exports (up from 51.0 to 51.6) and employment (up from 50.5 to 51.3) accelerated a bit for the month. At the same time, however, new orders (down from 52.0 to 51.9) and output (down from 52.7 to 52.5) each edged slightly lower in their growth rates. Overall, Eurozone manufacturers have now reported expanding levels of activity every month since June 2013, albeit with weaker growth than desired.

More than anything, this report shows that Europe is not immune to the softening in manufacturing activity seen worldwide. Markit also released preliminary PMI data for France and Germany, which continue to move in opposite directions. German manufacturing activity (up from 50.7 to 51.9) rebounded in April to a three-month high, led by stronger demand and production; whereas, French manufacturers (down from 49.6 to 48.3) reported a second straight contraction, with new orders (down from 47.8 to 45.7) declining at their fastest pace in 14 months.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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