U.S. ISM Manufacturing Index (April 2024)

Leslie Preston, Managing Director & Senior Economist | 416-983-7053

Date Published: May 1, 2024

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Manufacturing slips back into contraction in April, but price pressures pick up

  • The ISM Manufacturing Index slipped back into contractionary territory in April, dipping to 49.2, from 50.3 in March. Even so, 9 of 16 industries reported growth in April – the same as in March.
  • Demand softness was reflected by the new orders and new export orders sub-indices both flipping back into contraction, after pointing to expansion in March. The backlog of orders index dropped slightly further into contractionary territory.
  • Output also moderated, but remained in positive territory. However, headcount reductions continued in April, but showed signs of easing. 
  • Consistent with the resurgence in inflation seen in other measures, the prices paid sub-index rose 5.1 pp to 60.9, "as commodity-driven costs continue to climb". That is the highest level for this component since the summer of 2022.  

Key Implications

  • The manufacturing sector's flirtation with expansionary territory in March proved brief. The ISM Institute characterizes demand as " at the early stages of recovery" and focused on the fact that production continued to expand. 
  • The path towards recovery for the manufacturing sector has been bumpy, and April's dip may prove to be a blip on an continuing uptrend given overall strength in the U.S. economy (see GDP commentary). The index is often a market mover, but today investors are awaiting how the Fed will address hotter inflation readings in recent months.