Last Updated: May 1, 2023 at 10:50 a.m. ET
First Published: May 1, 2023 at 10:05 a.m. ET
The numbers: A key barometer of U.S. factories hung in negative territory for the sixth month in a row, signaling ongoing malaise in a key part of the economy as rising interest rates sap consumer and business spending.
The Institute for Supply Management’s manufacturing survey rose to 47.1% from a three-year low of 46.3% in the prior month.
Numbers…
The numbers: A key barometer of U.S. factories hung in negative territory for the sixth month in a row, signaling ongoing malaise in a key part of the economy as rising interest rates sap consumer and business spending.
The Institute for Supply Management’s manufacturing survey rose to 47.1% from a three-year low of 46.3% in the prior month.
Numbers below 50% signal contraction in the industrial side of the economy. The last time the index was below that threshold for more than six months was between March 2008 and June 2009 — during the Great Recession.
Economists polled by the Wall Street Journal had forecast the index to register 46.7% in April.
Key details:
- The index of new orders rose 1.4 points to 45.7%, but it remained at a level associated with a recession. “New order rates remain sluggish as panelists remain concerned about when manufacturing growth will resume,” said Timothy Fiore, chairman of the survey.
- The production barometer rose 1.1 points to 48.9%.
- The employment gauge climbed 3.3 points to 50.2% and rebounded from a three-year low.
- The price index, a measure of inflation, increased four points to 53.2%. That indicates inflation was still a big problem. “Pricing pressures continue to plague daily operations,” a food manufacturer told ISM.
Big picture: Manufacturers were struggling with weaker demand, exacerbated by a shift in spending patterns among U.S. households toward services and away from goods.
Some companies have also gotten stuck with extra inventories or unsold goods and they have cut back, too.
“This has made for a significant slowdown in sales orders for the last number of months,” said an executive at a machinery manufacturer surveyed by the ISM.
Companies were unsure when the outlook will improve, but with the Federal Reserve still raising interest rates, new orders and production are unlikely to increase much if at all anytime soon.
Looking ahead: “We seem to be in a season of contradictions,” a metals-company executive told ISM. “Business is slowing, but in some ways, it isn’t. Prices for some commodities are stabilizing, but not for others. Some product shortages are over, others aren’t. Trucking is more plentiful, except when it isn’t. There’s uncertainty one day, but not the next.”
“The next couple of months should provide answers — or not. It’s hard to make projections at the moment,” the executive added.
Market reaction: The Dow Jones Industrial Average
DJIA
and S&P 500
SPX
rose in Monday trades.
Read More:U.S. manufacturers stuck in negative territory for 6th month in a row, ISM finds
2023-05-01 14:05:00