Those looking for stabilization in the downward trajectory of U.S. manufacturing sentiment will have to wait until mid-year.
The April 2019 Institute for Supply Management Report on Business – an important gauge of U.S. factories – arrived below expectations with the top line index slowing to 52.8 from 55.3, the weakest level since late 2016.
Forward-looking new orders index eased to 51.7 from 57.4 a month earlier. The employment sub-indices slowed to 52.4 from 57.5 in March, which would imply another month of disappointing hiring in manufacturing ahead of Friday’s BLS estimate of the April hiring.
Global headwinds and a modest pace of consumption have combined to slow the minor inventory imbalance in the manufacturing ecosystem.
The comments section of the ISM survey clearly indicated problems inside the North American supply chain linked to policy on trade and immigration along the southern U.S. border. This, along with a modest inventory imbalance, will continue to damp overall manufacturing and industrial production.
Global headwinds and a modest pace of consumption have combined to slow the minor inventory imbalance in the manufacturing ecosystem.
Backlogs increased to 53.9 from 50.4, and inventories increased to 52.9 from 51.8, both of which point to a difficulties in procuring goods used at earlier stages of production, intermediate goods and sufficient demand to clear inventories. One of the most under-discussed issues in manufacturing is the build-up of autos in showrooms around the country. The U.S. consumer will need to step up activity to clear the inventory imbalance in the auto industry, and this is the most probable explanation of the sentiment data around inventory to sales ratios in the industrial ecosystem.
Prices paid eased to 50 from 54.3, which is consistent with moderation in an array of inflation indices.
