United States: U.S. manufacturing sector slows heading into Q2
May 2, 2016
Following two consecutive increases, the ISM manufacturing index declined more than expected in April. The indicator fell from 51.8 in March to 50.8 and also came in below the 51.4 the markets had expected. The ISM indicator continued to suggest expansion in the manufacturing sector—it sits above 50—but the drop signals that the pace of growth slowed considerably.
The underlying details suggest that the drop in April reflected that production and new orders softened over the previous month. Conversely, employment and new exports increased and the price sub-component moved up, in line with the current rise in commodities prices. Moreover, inventories dropped slightly in April, which suggests that the sector’s inventory excess has not fully cleared.
Author: Ricardo Aceves, Senior Economist