Due to the slowdown in the growth of new orders, production and employment indexes, the April ISM manufacturing purchasing managers’ index (PMI) released by the United States on Monday (2nd) fell to 55.4, which has fallen for two consecutive months, not only worse than the market expectation of 57.6, It was also lower than the previous value of 57.1 in March, the lowest level since 2020. However, supply chain bottlenecks appear to be easing, with price and backlog index growth slowing.
April US ISM manufacturing PMI sub-index:
- The new orders index was reported at 53.5, the previous value was 53.8
- The production index was reported at 53.6, the previous value was 54.5
- The employment index was reported at 50.9, the previous value was 56.3
- The supplier delivery index was reported at 67.2, the previous value was 65.4
- The inventory index was at 51.6, the previous value was 55.5
- The client inventory index was reported at 37.1, the previous value was 34.1
- The price index reported 84.6, the previous value was 87.1
- The index of outstanding orders reported 56.0, the previous value was 60.0
- The export order index was reported at 52.7, the previous value was 53.2
- The import index of raw materials was reported at 51.4, the previous value was 51.8
The latest data showed signs of softening demand for commodities, with new orders and production both falling to their lowest levels since May 2020 at 53.5 and 53.6, respectively, but still above the growth line. Both indices were weak, pointing to weaker demand amid rising price pressures and uncertainty.
Although the supplier delivery index climbed to 67.2 in April from the previous 65.4, hitting a five-month high, underscoring that manufacturers are still plagued by China’s new crown epidemic blockade measures and the Russian-Ukrainian war delaying shipments, resulting in extended delivery times. On the other hand, the growth rate of prices and the index of outstanding orders slowed down in April, which seems to reveal signs of easing in the supply chain. The two figures dropped to 84.6 and 56.0 respectively, of which the index of outstanding orders has declined for two consecutive months.
In addition, the slight improvement in the imbalance between supply and demand was also reflected in the client inventory index, which rose to 37.1 from 34.1 in March, the highest since December 2020, but still at an all-time low.
Inflation may also be peaking as supply chains may begin to ease, with the April price index slipping to 84.6 from the previous reading of 87.1. At present, the market believes that the Federal Reserve (Fed) may raise interest rates by 2 yards (50 basis points) on Wednesday (4th) in order to calm the high inflation.
At the same time, the employment index also fell to 50.9 last month from the previous value of 56.3, a seven-month low, suggesting that employers slowed down the pace of manpower hiring in April. The United States will announce April non-farm payrolls on Friday (6th), and the market estimates that the manufacturing industry will increase by more than 30,000 jobs.
Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee, said U.S. manufacturing remains in a demand-driven and supply-chain-constrained environment, and last month’s slowdown in addressing labor shortages at all levels of the supply chain has slowed.
Data on the same day showed that the final value of the U.S. Markit Manufacturing PMI in April was 59.2, slightly lower than the expected 59.7 and the previous value of 59.7, the highest since September 2021, which was obviously deviated from the ISM Manufacturing PMI, but the two major data were in price. The trend on the level is consistent – there is no downward trend in price pressure.
Chris Williamson, global chief business economist for the S&P 500, said companies are facing continued price increases due to rising energy prices, tight supply chains and rising wage costs, which have sent both input costs and sales prices soaring, while sales prices have accelerated to 1.5%. near record levels. Rising inflationary pressures show no sign of abating.