Economy

Manufacturing falls sharply in April, but not as much as expected

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Key Points
  • The U.S. manufacturing slump intensified in April to its worst level in 11 years, though the fall was not as much as economists had feared.
  • The ISM Manufacturing Index fell to 41.5, better than Wall Street estimates of 35 but down sharply from March's 49.1. A reading below 50 indicates contraction.
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ISM manufacturing index beats expectations in April at 41.5

The U.S. manufacturing slump intensified in April to its worst level in 11 years, though the fall was not as much as economists had feared.

The ISM Manufacturing Index fell to 41.5, better than Wall Street estimates of 35 but down sharply from March's 49.1. The measure is a diffusion gauge, measuring the percentage of firms seeing expansion, so a reading below 50 indicates contraction.

While virtually every category showed sharp declines, the overall index was held higher by inventories, which showed a reading of 49.7 — up 2.8 percentage points from the March reading — and an 11-point jump in supplier deliveries to 76.

New orders were at 27.1, down 15.1 points, while production fell to 27.5, off 20.2 points from a month earlier. The employment index slid to 27.5, a decline of 16.3 percentage points and reflective of more than 30 million claims for unemployment benefits over the past six weeks.

The prices index also fell, dropping 2 points to 35.3.

There also was a separate piece of news that was better than expectations: Construction spending rose 0.9% in March against estimates for a 3.2% decline.

On the manufacturing side, though, the mood was generally downbeat. Comments from respondents to the ISM survey indicated strongly negative sentiment about their prospects as the U.S. continues to endure the government-enforced lockdown efforts to contain the coronavirus outbreak.

"COVID-19 has destroyed our market and our company. Without a full recovery very soon, and some assistance, I fear for our ability to continue operations," said a respondent in the nonmetallic mineral products industry.