Textile, apparel and leather manufacturers were among the 18 manufacturing industries that reported growth in the April “Manufacturing ISM Report on Business.”
Timothy R. Fiore, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee, said the April Manufacturing PMI registered 60.7 percent, a decrease of 4 percent from the March reading of 64.7 percent. This figure indicates expansion in the overall economy for the 11th month in a row although at a slower rate than March after contraction in April 2020 in the early days of the coronavirus crisis in the United States.
A Manufacturing PMI above 43.1 percent, over a period of time, generally indicates an expansion of the overall economy, Fiore noted, meaning the April Manufacturing PMI indicates the overall economy grew in April.
“Survey Committee members reported that their companies and suppliers continue to struggle to meet increasing rates of demand due to coronavirus impacts limiting availability of parts and materials,” Fiore said. “Recent record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy. Worker absenteeism, short-term shutdowns due to part shortages and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential.”
ISM’s New Orders Index registered 64.3 percent in April, down 3.7 percentage points compared to the 68 percent reported in March. This indicates that new orders grew for the 11th consecutive month. A New Orders Index above 52.8 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders.
Of the 18 manufacturing industries, the 16 that reported growth in new orders in April included textile mills, with apparel and leather reporting neither an increase nor a decline.
The Production Index registered 62.5 percent in April, 5.6 percentage points lower than the March reading of 68.1 percent. An index above 52.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.
Textile mills were among the 14 industries reporting growth in production during the month, with apparel and leather indicating flat manufacturing movement.
The delivery performance of suppliers to manufacturing organizations was slower in April, as the Supplier Deliveries Index registered 75 percent. This is 1.6 percentage points lower than the 76.6 percent reported in March. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.
“The Supplier Deliveries Index reflects difficulties suppliers continue to experience due to COVID-19 impacts as hiring challenges, raw materials lead times and pricing, transportation availability and raw materials inventories impact all levels of the supply chain,” Fiore said. “Supplier labor, material and transportation constraints are not expected to diminish in the second quarter due to continuing pandemic impacts amid strong demand.”
Of the 18 industries, 17 reported slower supplier deliveries in April, led by apparel and leather, and textile mills.
The Inventories Index registered 46.5 percent in April, 4.3 percentage points lower than the 50.8 percent reported for March. An Inventories Index greater than 44.5 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis figures on overall manufacturing inventories.
“Inventories remain unstable due to ongoing supplier constraints,” Fiore said. “In April, supplier delivery rates were not able to keep up with new-order and production levels, causing a measurable draw down in raw material inventories at panelists’ companies.”
The five industries reporting higher inventories in April included textile mills, while apparel and leather were flat.
The ISM Prices Index registered 89.6 percent, an increase of 4 percent compared to the March reading of 85.6 percent, indicating raw materials prices increased for the 11th consecutive month. In the last three months, the index has been at its highest levels since July 2008, when it registered 90.4 percent. A Prices Index above 52.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.
In April, for the fourth month in a row, all 18 industries reported paying increased prices for raw materials, led by apparel and leather, furniture and related products, and textile mills.
ISM’s New Export Orders Index registered 54.9 percent in April, up 0.4 percent from March. The textiles and apparel sectors did not report an increase or decrease in this category.
ISM’s Imports Index registered 52.2 percent in April, a decrease of 4.5 percent compared to the 56.7 percent reported for March.
“Panelists continued to note backlogs in ports of entry, as well as difficulties in arranging drayage and operating within the domestic transportation market,” Fiore said.
Six industries, including textile mills and apparel and leather, reported no change in imports in April compared to March.