U.S. manufacturing production growth decelerated in April, manufacturing PMI dropped to 52.8

The seasonally adjusted Markit final U.S. manufacturing PMI data showed a sustained rise in U.S. manufacturing production; however, the pace of growth slowed further from the 22-month peak registered in January. The manufacturing PMI dropped to 52.8 in April from March’s 53.3, signalling the slowest improvement in overall business conditions since September 2016, noted Markit.

The drop in the index greatly indicates subdued contributions from output and new business growth in April. This more than countered a slightly improvement in job creation. Production in manufacturing rose for the eleventh consecutive month in April. However, the latest survey hinted that the pace of growth eased to its most subdued in seven months. New order growth also moderated to its slowest since September 2016. Survey respondents have mainly attributed this to more cautious spending among domestic clients. In the meantime, sales of export gathered pace in April, with the latest rise in new work from abroad the most rapid since August 2016, stated Markit.

Subdued growth of total new work added to the weakest upturn in purchasing activity throughout the manufacturing sector since September 2016. Manufacturers also sought to cut their inventory holdings, with stocks of purchases dropping slightly for the first time in seven months. On the contrary, postproduction inventories rose at a modest rate in April. Backlogs of work were up for the eleventh consecutive month, while the latest growth was the most rapid since October 2015. This indicates renewed pressures on operating capacity. Thus, the employment growth recovered from the seven-month low registered in March.

Upbeat sentiment about the outlook for production in the next 12 months also underpinned job creation. The extent of business optimism rose in April; however, it continued to stay lower than the peak witnessed at the beginning of 2017. In the meantime, the latest survey underlined robust cost pressures throughout the manufacturing sector. The pace of input price inflation quickened to its most rapid since September 2014.  Several panel members have cited increased prices for metals, particularly steel. Attempts to pass on higher costs to clients resulted in the most marked increase in factory gate charges for almost two-and-a-half years, said Markit.