ISM Manufacturing: Slight Expansion

May 2, 2016
Bottom Line: Manufacturing activity expanded in April for the 2nd consecutive month, but was lower than expectations. The differential between new orders and inventory levels declined only slightly, suggesting manufacturing activity levels will hold in expansionary territory (above 50 on headline ISM) over the coming months. Employment in the manufacturing sector fell and was slightly below the average survey level for the last twelve months. Prices paid, increased from 51.5% to 59.0% this month indicating an increase in the price of raw materials. Overall the report suggests very modest manufacturing activity. The ISM Manufacturing Index FELL by 1.0 points in April to 50.8%, compared with market expectations for a smaller decline to a 51.4%. Moreover, this was its 2nd consecutive expansionary reading. This indicates that manufacturing activity expanded slightly during the month. New Orders declined modestly from 58.3% to 55.8%. Meanwhile, Export Orders grew slightly and expanded for the 2nd straight month. Production declined slightly from 55.3% to 54.2%. Consequently, Order Backlogs grew for the 2nd straight month. Inventories declined modestly from 47.0% to 45.5%. They are modestly below the average survey level for the last twelve months. Employment grew slightly from 48.1% to 49.2%, suggesting there still will be soft factory job creation in next payroll employment report. Prices grew moderately.
Article by contingentmacro