US Manufacturing Activity Shrinks by the Most Since November
US manufacturing activity shrank in April by the most in five months as lean order books prompted the steepest output contraction since 2020.
The Institute for Supply Management’s factory gauge eased 0.3 point to 48.7, data out Thursday showed. The group's production index stumbled more than 4 points to 44. Readings below 50 indicate contraction. Prices paid for inputs, however, accelerated slightly.
The figures illustrate an industrial sector struggling for traction as US tariffs and general uncertainty surrounding trade policy interrupt expansion plans. Orders shrank for a third month and backlogs retreated at a faster pace, consistent with subdued demand.
The report also showed the strategy of rushing in imports ahead of tariffs is drawing to a close. The ISM imports index declined at the fastest pace since the end of 2023.
In addition to the headwinds posed by sluggish demand, producers are also contending with higher costs. A measure of prices paid for materials increased to the highest level since June 2022 despite cheaper energy costs.
Weak orders, slower production and declining backlogs help explain a third straight month of decreasing manufacturing employment. Government data on Friday are expected to show factory payrolls fell in April for the first time in three months.
Meanwhile, producers are keeping inventories lean. The ISM's gauge fell to 50.8.
Source : Bloomberg
