The nation's manufacturing sector expanded for the fifth straight month in April, but at the lowest growth rate of the year, according to the Institute for Supply Management.
The institute's closely watched purchasing managers index for April registered 50.7, down from 51.3 in March. A number above 50 indicates expansion.
"At 50.7, the indicator suggests that manufacturing activity is barely growing," said Daniel Meckstroth, chief economist for the Manufacturers Alliance for Productivity and Innovation, in a blog post. "Over the last 20 years, the ISM index has been at or below 50.7 one-third of the time."
The ISM's employment index dropped by 4 points – from 54.2 in March to 50.2 in April – which prompted Meckstroth to assert that "employment in manufacturing has come to a halt."
Among the positive signs, the ISM's new-orders index increased from 51.4 in March to 52.3 in April, while the production index increased from 52.2 in March to 53.5 in April. Both indices point to accelerating growth.
However, the inventories index dropped from 49.5 to 46.5, the second straight month of inventory contraction.
"Manufacturing activity was relatively strong in the first three months
of this year, led by pent-up demand for motor vehicles and the housing
rebound," Meckstroth said. "Some of the production growth came from unwanted inventory
accumulation; manufacturers are now in the process of adjusting
inventories back down, leading to a soft patch in industrial activity
that may persist for a few months.
"The fundamentals, however, point to
moderate 3 percent manufacturing industrial production growth this
year – slightly faster than the overall economy, but not much."
The ISM''s exports index dropped by two percentage points in April, while the imports index ticked higher by one percentage point.
"The ISM report points out that imports are growing faster than exports," Meckstroth said in his blog. "Because U.S. manufacturing imports are substantially larger than exports, the trade impact on domestic manufacturing is now decidedly negative."
The ISM noted that the overall U.S. economy expanded for the 47th consecutive month.