During his tenure at ARC, Steve has utilized his international industrial automation experiences across a range of discrete and process industries to develop a series of technology forecast studies for Reengineering and Systems Integration. His expertise on manufacturing software applications contributed to the highly successful study on Enterprise Asset Management and Maintenance.
April 2020 Manufacturing ISM Report On Business Has Some Indices at All-time Lows
Blog: NASSCOM Official Blog
The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected. Economic activity in the manufacturing sector contracted in April, and the overall economy contracted after 131 consecutive months of expansion, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.
Manufacturing contracted in April, as the PMI registered 41.5 percent, 7.6 percentage points lower than the March reading of 49.1 percent. The PMI contracted strongly in April after dropping below 50 percent in March. The PMI recorded its lowest level since April 2009, when it registered 39.9 percent. The 7.6-percentage point decrease in the PMI is the largest one-month decline since a 9-percentage point decrease in October 2008.
ISM’s New Orders Index registered 27.1 percent in April, a decrease of 15.1 percentage points compared to the 42.2 percent reported for March. This indicates that new orders contracted for the third consecutive month. This is the index’s lowest reading since December 2008, when it registered 25.9 percent. The 15.1-percentage point decrease in the New Orders Index between March and April is the largest one-month decline since April 1951 (18.7 percentage points).
The Production Index registered 27.5 percent in April, the lowest figure since numeric ISM Report On Business index records began in January 1948. The index indicated a second straight month of contraction, and the 20.2-percentage point decrease from the March reading of 47.7 percent is the largest one-month decline since January 1984, when the index fell 20.7 percentage points.
ISM’s Employment Index registered 27.5 percent in April, 16.3 percentage points lower than the March reading of 43.8 percent. This is the index’s lowest reading since June 1949 (27.2 percent) and largest one-month percentage-point decrease since numeric records began in January 1948.
The delivery performance of suppliers to manufacturing organizations was slower in April, as the Supplier Deliveries Index registered 76 percent. This is 11 percentage points higher than the 65 percent reported in March. The index reached its highest level since April 1974, when it registered 82.1 percent. The 11-percentage point increase is the largest one-month jump since January 1976, when the Supplier Deliveries Index increased 12.8 percentage points.
The Inventories Index registered 49.7 percent in April, 2.8 percentage points higher than the 46.9 percent reported for March. The index contracted for an 11th straight month, but at a slower rate. Inventory contraction slowed as expected due to supply chain disruptions and lack of labor to convert material.
ISM’s Backlog of Orders Index registered 37.8 percent in April, an 8.1-percentage point decrease compared to the 45.9 percent reported in March, indicating order backlogs contracted for the second consecutive month. This is the index’s lowest reading since March 2009 (37.6 percent). The 8.1-percentage point decrease in the Backlog of Orders Index is the largest one-month decline since May 2011, when it dropped 9.1 percentage points.
Of the 18 manufacturing industries, the two that reported growth in April are: Paper Products; and Food, Beverage & Tobacco Products. The 15 industries reporting contraction in April, in order, are: Printing & Related Support Activities; Furniture & Related Products; Transportation Equipment; Textile Mills; Fabricated Metal Products; Nonmetallic Mineral Products; Machinery; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Wood Products; Miscellaneous Manufacturing; Computer & Electronic Products; Primary Metals; and Chemical Products.
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About ARC Advisory Group (www.arcweb.com): Founded in 1986, ARC Advisory Group is a Boston based leading technology research and advisory firm for industry and infrastructure.
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