Manufacturers see 11th month of growth

Don Hogsett, May 10, 2004

The U.S. manufacturing sector continued to improve during April, gaining strength for an 11th straight month, helped notably by growth in production, order backlogs and employment, according to a report by the nation's purchasing managers.

Striking a harshly negative note, however, the prices manufacturers pay for raw materials and supplies continued to shoot up, rising for a 26th straight month, according to the monthly manufacturing report from the Institute for Supply Management, suggesting the rate of consumer inflation will start to edge higher.

Overall, the monthly Purchasing Managers' Index stood at 62.4 percent for April, virtually unchanged from the 62.5 percent recorded in March.

"The manufacturing sector continued to improve in April," said Norbert Ore, chairman of the ISM's Business Survey Committee. While new orders contracted slightly compared to last month, production moved upward, and employment grew at a faster rate. A persistent worry is "escalating costs in a market that is still resistant to higher consumer prices," said the monthly report.

Using the ISM's methodology, any reading above 50 percent indicates growth in the manufacturing sector, while any number beneath 50 percent points to a contraction.

Suggesting the manufacturing sector's current resilience, the index has stood above a level of 60 percent for the past six months, Ore reported.

"The second quarter is off to a very strong start," Ore continued. "Many respondents indicate that order backlogs are growing for the first time in several years."

Improving steadily over the past three months, the Production Index advanced to a reading of 67 in April, up from 65.5 in March and 63.9 in February.

With more manufacturers hiring, the Employment Index advanced to 57.8 in April, up from 57 in March and 56.3 in February.

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

Purchasing Managers' Index -0.1%
New Orders -0.7
Production +1.5
Employment +0.8
Inventories -3.5
Customers' Inventories +1.0
Prices Manufacturers Pay +2.0
Order Backlogs +3.0
Export Orders -1.0
Imports +1.7
Source: Institute for Supply Management

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