1 May 2003
U.S. economy grows, manufacturing doesn't
Tempe, Arizona — Economic activity in the manufacturing sector failed to grow in April, while the overall economy grew for the 18th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.
ISM's PMI declined to 45.4 percent in April, a decrease of 0.8 percentage point when compared to 46.2 in March.
The report was issued today by Norbert J. Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation.
"The manufacturing sector failed to grow in April for the second consecutive month. The sector continued the lackluster performance that was evident in March, as New Orders and Production remained weak. The good news is that the Prices Index appears to have peaked in March, with April showing a significant softening in pricing pressures."
ISM's Backlog of Orders Index indicates that order backlogs declined for the 10th consecutive month, while ISM's Supplier Deliveries Index reflects no change (at 50 percent) after 15 consecutive months of slower deliveries. Manufacturing employment continued to decline in April as the index remained below the breakeven point (an index of 50 percent) for the 31st consecutive month. ISM's Prices Index is above 50 percent as manufacturers experienced higher prices for the 14th consecutive month. New Export Orders grew in April for the 16th consecutive month. April's Imports Index grew for the sixth consecutive month.
Comments from purchasing and supply executives turned from a focus on war in March, to soft demand and offsetting the higher prices they have had to pay recently.
ISM's PMI declined to 45.4 percent in April, a decrease of 0.8 percentage point when compared to 46.2 in March. ISM's New Orders Index declined 1 percentage point from 46.2 percent in March to 45.2 percent in April. ISM's Production Index rose 0.7 percentage point from 46.3 percent in March to 47 percent in April. The ISM Employment Index is at 41.4 percent for April, a decrease of 0.7 percentage point when compared to the 42.1 percent reported in March.
ISM's Supplier Deliveries Index registered 50 percent, 3.8 percentage points lower than March's 53.8 percent. ISM's Inventories Index rose slightly to 42.7 percent from 42.3 percent in March. ISM's Customers' Inventories Index for April is at 44.5 percent, an increase of 2.5 percentage points compared to the March reading of 42 percent. ISM's Prices Index in April is 63.5 percent, a decrease of 6.5 percentage points from March's 70 percent. ISM's Backlog of Orders Index increased 6 percentage points, registering 47.5 percent in April compared to 41.5 percent in March.
ISM's New Export Orders Index registered 51.1 percent, down 0.9 percentage point from March's 52 percent. ISM's Imports Index rose from 52.5 percent in March to 54.5 percent in April.
"Apprehension by supply managers about the impact of war appears to be diminished as the war resulted in few, if any, consequences to supply chains. They have now turned their concerns toward soft demand as manufacturing lacks drivers at this time. Supply managers will look to consumer confidence and business confidence as major influencers for the second half of the year," said Ore.
Of the 20 industries in the manufacturing sector, six industries reported growth: Wood & Wood Products; Chemicals; Printing & Publishing; Electronic Components & Equipment; Instruments & Photographic Equipment; and Transportation & Equipment.
"Acetone was the only commodity reported in short supply. Commodities reported up in price are: Acetone; Caustic Soda; Chemicals; Diesel Fuel; Energy; Ethylene; Freight; Fuel Oil; Fuel Surcharges; Gasoline; High Density Polyethylene Resin; Low Density Polyethylene; Methanol; Natural Gas; Oil; Plastic; Plastic Resin; Plastic Resin-Based Products; Plastic Shrink Wrap; Poly Bags; Polyethylene; Polyethylene Products; Polypropylene; Polystyrene; Propylene; and Resin. The only commodities reported down in price are Corrugated; Fuel Oil; Natural Gas; Steel; and Wheat," Ore stated.
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