FX.co ★ U.S. Manufacturing Index Indicates Modest Contraction In April

A recent report released by the Institute for Supply Management indicated a minor contraction in U.S. manufacturing activity for the month of April. The manufacturing Purchasing Managers' Index (PMI) fell from 50.3 in March to 49.2 in April. A result below 50 signifies a contraction, something economists had expected with a projected result down to 50.0.

The slight decline in the index follows a modest expansion in March, ending sixteen straight months of contraction. Timothy R. Fiore, the Chair of the ISM Manufacturing Business Survey Committee, explained that despite the deceleration in demand improvement, the output remained positive, and inputs were accommodative.

This nominal decrease in the key index was partly due to a downturn in new orders, with the new orders index dropping from 51.4 in March to 49.1 in April. The same month saw a reduction in the production index from 54.6 in March to 51.3, reflecting a deceleration in growth pace.

Although the employment index rose from 47.4 in March to 48.6 in April, this number is still below 50, indicating a continued decrease in manufacturing jobs. The report also revealed a significant acceleration in the pace of price growth, with the prices index jumping from 55.8 in March to 60.9 in April.

The Institute for Supply Management is scheduled to release a separate report regarding the activity in the U.S. service sector for the month of April. There is an expectation that the services PMI will rise from 51.4 in March to 52.0 in April, a number above 50 which would indicate growth.