The April 2010 ISM Manufacturing Survey is out and PMI came in at 60.4%. This is the 9th consecutive month for expansion.
The rate of growth as indicated by the PMI is the fastest since June 2004 when the index hit 60.5 percent. Manufacturers continue to see extraordinary strength in new orders, as the New Orders Index has averaged 61.6 percent for the past 10 months. The signs for employment in the sector continue to improve as the Employment Index registered its fifth consecutive month of growth. Overall, the recovery in manufacturing continues quite strong, and the signs are positive for continued growth."
The ISM neutral point is 50. Above is growth, below is contraction, although the ISM is this report is noting some variance in the individual indexes (see report).
| MANUFACTURING AT A GLANCE APRIL 2010 | ||||||
|---|---|---|---|---|---|---|
|
Index |
Series Index April |
Series Index March |
% Point Change |
Direction |
Change Rate |
Trend* (Months) |
| PMI | 60.4 | 59.6 | +0.8 | Growing | Faster | 9 |
| New Orders | 65.7 | 61.5 | +4.2 | Growing | Faster | 10 |
| Production | 66.9 | 61.1 | +5.8 | Growing | Faster | 11 |
| Employment | 58.5 | 55.1 | +3.4 | Growing | Faster | 5 |
| Supplier Deliveries | 61.3 | 64.9 | -3.6 | Slowing | Slower | 11 |
| Inventories | 49.4 | 55.3 | -5.9 | Contracting | From Growing | 1 |
| Customers' Inventories | 33.0 | 39.0 | -6.0 | Too Low | Faster | 13 |
| Prices | 78.0 | 75.0 | +3.0 | Increasing | Faster | 10 |
| Backlog of Orders | 57.5 | 58.0 | -0.5 | Growing | Slower | 4 |
| Exports | 61.0 | 61.5 | -0.5 | Growing | Slower | 10 |
| Imports | 58.0 | 57.0 | +1.0 | Growing | Faster | 8 |
| OVERALL ECONOMY | Growing | Faster | 12 | |||
| Manufacturing Sector | Growing | Faster | 9 | |||
The below graph (normalized to zero), shows this is the first time inventories have contracted again, from last month's expansion.
Hiring is finally looking a little more healthy. Below is the graph, normalized to zero on the ISM manufacturing hiring trend.
Below are the same metrics, on new orders. This is great news, as one can see, at least from this recession period.
Here is production:
Note customer's inventories are too low with no reports of their inventories being too high. This is also good news for it might mean more demand, more new orders for manufacturing.
Exports are slower and that is consistent with the Q1 2010 GDP report. Why export new orders are slowing is unclear.
As one notes, the levels are pretty much hitting pre-recession levels for manufacturing. U.S. manufacturing has been hammered of course by bad trade deals, but at least it's recovering from the financial meltdown. Now we just need manufacturing to expand and be a larger part of the overall economy. Estimates range that manufacturing is only 8-12% of the overall economy currently.
Here is the analysis of last month's ISM Manufacturing report.
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