ISM Manufacturing Index

The Institute for Supply Management said its manufacturing index fell to 41.5% last month from 49.1% in March. This is the lowest since April 2009. Any reading below 50 shows shrinking activity.

The details of the report were grim. The index for new orders dropped 15.1 points to 27.1%, the biggest monthly drop since 1951. Production falling a steeper 20.2 points to 27.5%, the lowest level on record. Customer inventories grew, which is negative for the future. The employment index decreased 16.3 points to 27.5%. That’s the lowest level since 1949 and the largest one-month drop since the series began in 1948.

What’s more, 16 of the 18 industries tracked by the ISM reported declines. That’s another bad sign. Only paper products and foods products rose in April.

In a separate release, IHS Markit reported its U.S. manufacturing PMI sank to 36.1 in April, down from the “flash” estimate of 36.9. The index stood at 48.5 in March.

The decline reflects the abrupt shutdown in manufacturing activity due to efforts to stop the spread of COVID-19.

Timothy Fiore, chair of the ISM manufacturing business survey committee, said the worst might be behind the manufacturing sector. He said the bottom hadn’t been reached but “we can see it.” There would be 4-6 more weeks of decline, but not at the rate seen so far, as uncertainty is ebbing, Fiore told reporters.

Source: MarketWatch