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Growth Continues Gradual Slowdown

The U.S. manufacturing sector continued to grow during April, but at a steadily slowing pace, with the rate of growth decelerating during each of the past six months, the nation's purchasing managers reported.

The Institute for Supply Management (ISM) said its monthly gauge of manufacturing activity slipped 1.9 percentage points during April to a reading of 53.3, down from 55.2 in March and down 4.3 percent from 57.6 in November. The index is now down 4.8 percentage points from its 12-month average of 58.1. A reading of 50 or more indicates growth in the manufacturing sector, while a reading beneath 50 indicates contraction.

In April, the manufacturing sector grew for a 23rd consecutive month, “the longest period of growth in the last 16 years,” said Norbert Ore, chairman of the ISM's Manufacturing Business Survey Committee. “However, the rate of growth slowed to its lowest level since July 2003. The trend is definitely toward a slower pace of growth, and that should relieve some of the pricing pressure that the sector has experienced during 2004 and year-to-date in 2005. Declines in inventories indicate that manufacturers are adjusting to slower growth in new orders.”

New orders fell 2.4 percentage points during the month, and order backlogs slipped 3 percentage points. Production was relatively flat, edging up just 0.2 percentage points.

In good news for suppliers hard hit by rising prices of raw materials and supplies, the Prices Index declined 2 percentage points, reversing a recent run-up.

April snapshot
Manufacturing benchmarks
Month-over-month percentage-point change

Source: Institute for Supply Management
Purchasing Managers' Index -1.9%
New Orders -3.4
Production 0.2
Employment -1.0
Inventories -6.2
Customers' Inventories -4.5
Prices Manufacturers Pay -2.0
Order Backlogs -3.0
Export Orders 1.8
Imports -2.2


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