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Economic activity in the manufacturing sector expanded in April for the 33rd consecutive month, and the overall economy grew for the 35th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The PMI registered 54.8%, an increase of 1.4 percentage points when compared to March's reading of 53.4%. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 35th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 33rd consecutive month. Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through April (53.7%) corresponds to a 3.8% increase in real gross domestic product (GDP). In addition, if the PMI for April (54.8%) is annualized, it corresponds to a 4.1% increase in real GDP annually."

ISM's New Orders Index registered 58.2% in April, which is an increase of 3.7 percentage points when compared to the March reading of 54.5%. This represents a continuation of growth for the 36th consecutive month, and at a faster rate than in March. A New Orders Index above 52.3%, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

Performance by Industry

Of the 18 manufacturing industries, 16 are reporting growth in April, in the following order:

  • Furniture & Related Products
  • Printing & Related Support Activities
  • Machinery
  • Nonmetallic Mineral Products
  • Miscellaneous Manufacturing
  • Primary Metals
  • Paper Products
  • Transportation Equipment
  • Electrical Equipment, Appliances & Components
  • Plastics & Rubber Products
  • Apparel, Leather & Allied Products
  • Food, Beverage & Tobacco Products
  • Chemical Products
  • Fabricated Metal Products
  • Computer & Electronic Products
  • Petroleum & Coal Products

The only industry reporting contraction in April is Wood Products.

What Respondents are saying ...

  • "We expect our production levels to remain at the current level or increase over the next quarter." (Chemical Products)
  • "In general, demand remains strong for products, and we [are experiencing] more supply disruptions now than four to five months ago." (Machinery)
  • "The economy was off to a good start through the first quarter, but the European issues keep coming up as well as the recent disappointing jobs report. It appears that some of the early gains may be temporary."  (Fabricated Metal Products)
  • "Warm weather in Midwest appears to have helped soft drink sales." (Food, Beverage & Tobacco Products)
  • "Positive increase in volume of sales and orders, and slight uptick in inventories, indicate the overall outlook remains robust through summer at least." (Miscellaneous Manufacturing)
  • "Sales are slowing." (Computer & Electronic Products)
  • "Business conditions on a national scale have a very positive outlook for the commercial metals we provide. At this point, we have outperformed each quarter's goal and anticipate a strong finish." (Primary Metals)
  • "Strong demand [compared to] previous year." (Plastics & Rubber Products)
  • "Business indicators suggest a stronger stability in overall environment. Production and orders are stable." (Transportation Equipment)
  • "Business conditions continue to improve." (Furniture & Related Products)

To read the full April 2012 Manufacturing ISM Report On Business, click here.

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