U.S. ISM manufacturing index moderates in April, manufacturing activity to grow healthily in months ahead

The U.S. ISM manufacturing index moderated in the month of April, coming in below expectations. The index dropped to 57.3 in April from March’s 59.3. The fall was widespread throughout major subcomponents. The production index dropped to 57.2 and the employment index fell to 54.2.

New orders also fell, dropping 0.7 points to 61.2, in the midst of a decline in new export orders, which indicates towards possible deceleration in external demand. Moreover, the imports index also fell. The trade side of the report has been softening since February, and possibly reflects the uncertainty faced by businesses amidst the ongoing anti-trade rhetoric.

Elsewhere in the report, the index on prices paid rose to 79.3 and the backlog of orders rose. Suppliers’ deliveries decelerated, and according to the press release, has continued to be a constraining factor for production growth in the past couple of months.

However, the overall index and its subcomponents continue to be comfortably in the expansion zone, noted Barclays. Therefore, there is not much of a negative signal from today’s data and manufacturing activity is expected to grow healthily in months ahead, added Barclays.

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