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Manufacturing stretches recent gains

Tempe,Ariz.The manufacturing sector grew at a faster rate in April, although caution is due in light of raw material price increases, theInstitute for Supply Management (ISM) said.

In its monthly update on the strength of the manufacturing sector, the ISM said its Purchasing Managers’ Index (PMI) continued the positive trend that started in February after a January that saw the Index drop beneath the threshold level of 50, the dividing line between expansion and contraction.

April saw the PMI reach 54.7%, a reading that is the highest since an identical level was reported for May 2006. Looking at the components, ISM spokesman Norbert Ore said, “New Orders and Production improved significantly, as did Employment.”

“Manufacturers are now in their ninth month of inventory reduction, so supply chains are generally in balance,” he added.

“On the negative side,” Ore noted, “prices continue to rise at a rapid rate with metals and energy being the areas of greatest concern to buyers.”

Indeed, the Prices index rose by 7.5 percentage points in April – the fourth straight monthly hike – and with a downward trend in both Inventories (down 1.2 points) and Customers’ Inventories (down 1.0 points), the indication is that it could cost more to keep up with the growing Backlog of Orders (swinging up 7.5 points after a recent downturn).

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