The divergence between Markit’s US Manufacturing PMI and the ISM’s “Report on Business” narrowed a bit today with both numbers retreating a bit but ISM cooling more.

ISM Manufacturing

Index April March PP Change Direction Rate of Change Trend in Months
PMI® 54.8 57.2 -2.4 Growing Slower 8
New Orders 57.5 64.5 -7.0 Growing Slower 8
Production 58.6 57.6 1.0 Growing Faster 8
Employment 52.0 58.9 -6.9 Growing Slower 7
Supplier Deliveries 55.1 55.9 -0.8 Slowing Slower 12
Inventories 51.0 49.0 2.0 Contracting From Contracting 1
Customers’ Inventories 45.5 47.0 -1.5 Too Low Faster 7
Prices 68.5 70.5 -2.0 Increasing Slower 14
Backlog of Orders 57.0 57.5 -0.5 Growing Slower 3
New Export Orders 59.5 59.0 0.5 Growing Faster 14
Imports 55.5 53.5 2.0 Growing Faster 3

Slowest PMI Improvement in 7 Months

Key Findings

  • Headline PMI at 52.8 in April, down from 53.3 in March
  • Weaker rates of output and new order growth
  • Input prices rise at fastest pace since September 2014

April data revealed a sustained upturn in U.S. manufacturing production, but the rate of growth moderated further from the 22-month peak recorded in January. The slower rise in output volumes largely reflected a more subdued pace of new business growth in April. Payroll numbers continued to increase across the manufacturing sector, driven by efforts to boost production capacity. However, latest data indicated that manufacturers sought to reduce their stocks of purchases, which ended a six-month period of inventory building. Meanwhile, cost pressures intensified, with input prices rising at the fastest pace for just over two-and-a-half years.

The latest survey highlighted strong cost pressures across the manufacturing sector. The rate of input price inflation accelerated to its fastest since September 2014. A number of panel members cited higher prices for metals, especially steel. Efforts to pass on higher costs to clients led to the most marked rise in factory gate charges for nearly two-and-a-half years.

Neither report matches actual manufacturing output although Markit’s PMI has been consistently much closer to the hard data reports.

I suspect both reports are overly-influenced by the energy sector and airplane orders, ISM far more than Markit.

Related Articles 

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  3. Economists Expect 2nd-Quarter Recovery: Investigating the 1st-Quarter Weakness Theory
  4. Don’t Worry Weakness is Transitory: Fed Expects a Second Quarter Rebound, Higher Equity Prices

Mike “Mish” Shedlock