While the manufacturing industry saw only modest gains in production levels and customer demand compared to March, the industry may be on its slow way back to economic growth, according to two national economic indices.
The Institute for Supply Management’s Report on Business posted a Purchasing Managers’ Index at 47.1%, a 0.8 percentage point increase from March, marking a fifth month of consecutive economic contraction.
S&P Global's US Manufacturing PMI edged into growth mode this past month, with a reading of 50.2, the first time the index has reached above 50.0 since October 2022. A reading over 50.0 indicates economic expansion in the industry.
Manufacturers' output improved over the past month thanks to a rise in new orders, according to S&P Global.
"Although only modest, the rise in new orders hints at a tentative revival of demand, notably from consumers but there are also signs that fewer customers are deliberately winding down their inventory levels," S&P Global Market Intelligence Chief Business Economist Chris Williamson said in a statement.
ISM saw a slight bump in new orders in April up 1.4 percentage points to 45.7%, though still in contraction territory. Production saw a similar performance, with a reading at 48.9%.
Overall, ISM Manufacturing Business Survey Committee Chair Tim Fiore called the past month's industry performance "stable."
"We got some positive signs in this report," Fiore said on a call with reporters Monday. "The first one is that the output side, new order production, is relatively stable. Production is a really good proxy for billing, for revenue. . . So the production number being close to 49 [percent] says we have a little bit of an easing compared to March, but not as serious, so we're still pacing at a relatively good level here."
Prices were up compared to March, according to S&P Global, despite improvements in supply chain stability and lead times.
"Input costs and output charges increased at steeper rates during April. Higher supplier prices reportedly drove inflation as firms passed through greater operating expenses to customers," S&P Global stated in its monthly report.
Fiore noted similar improvements in the supply chain, including in the easing of the notorious inventory glut that plagued companies for months in the wake of a spree of overordering.
"The suppliers have adequate inventory, in some cases more than adequate inventory. And that's simply the fact that they were able to deliver faster," Fiore said on the call. "There's nothing in this report that would indicate to me that we're going to change from 47 to 51 [percent]."
Respondents to S&P Global's monthly survey reported their highest levels of optimism in three months regarding the industry, thanks to planned investment, greater supply chain reliability and the hope of an uptick in client demand.
Still though, with a week to go before ISM releases its updated economic forecast for 2023, Fiore underscored that the environment remains uncertain.
"It's been really difficult for the last six months for anybody to do a prediction of what the future looks like," he said.