By Ed Frankl
Activity among U.S. manufacturers weakened in April, a month after the sector snapped a 16-month streak of contraction, reflecting the continued fragility of the sector amid uncertainty over the economy and the path of Federal Reserve interest-rate cuts.
The Institute for Supply Management said Wednesday that its purchasing managers' index of manufacturing activity dipped to 49.2 from 50.3 in March, against a consensus of economists polled by The Wall Street Journal that expected it to remain in expansionary mode at 50.1. A 50 reading represents the threshold between shrinkage and growth.
The survey's measure of new orders fell back into contraction, while for production it expanded, but slowed. Elsewhere, the index for backlog of orders dropped, remaining in contractionary territory.
"After breaking a 16-month streak of contraction with an expansion in March, the manufacturing sector dropped back into contraction," said Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee.
"Although demand improvement slowed, output remains positive and inputs stayed accommodative," he added.
As a signifier that inflationary trends may be sticky, the prices index moved further upward, as commodity-driven costs continue to climb, ISM said.
Official inflation readings have been hotter than expected in recent months, suggesting the Federal Reserve might keep interest rates higher for longer, with the potential knock-on effect of stemming manufacturing investment.
Of the six biggest manufacturing industries, two--transportation equipment and chemical products--registered growth in April, Fiore added.
"Market conditions have definitely softened. Thankfully, our backlog is strong and will get us through the year," said one respondent to the survey from the machinery sector.
Write to Ed Frankl at edward.frankl@wsj.com
(END) Dow Jones Newswires
05-01-24 1046ET
