“US Manufacturing Sector fell to a three-year low in April, as new orders increased slightly and employment recovered, The Institute for Supply Management, Arizona, USA, said on Monday that its manufacturing PMI reading was 47.1 in April which was 46.3 in March, though it was the lowest reading since May 2020.
US Manufacturing Sector fell to a three-year low in April, as new orders increased slightly and employment recovered, but activity remained weak during higher borrowing costs and rigid credit, raising the risk of a recession in 2023.
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The Institute for Supply Management, Arizona, USA, said on Monday that its manufacturing PMI reading was 47.1 in April which was 46.3 in March, though it was the lowest reading since May 2020. Reuters polled economists, who predicted the index would rise to 46.8.
The Federal Reserve’s fastest interest rate hike campaign since the 1980s is weighing on the sector, which accounts for 11.3% of the economy.
The PMI stayed below the 50-point threshold for the sixth straight month, showing manufacturing contraction.
Following the recent financial market turmoil, banks have tightened lending. Additionally, spending has shifted away from goods, typically purchased on credit, and towards services.
Businesses are reducing restocking in preparation for lower demand later this year. According to government data released last week, private inventory investment dropped in the first quarter. This decline marks the first time since the third quarter of 2021. Corporate spending on equipment fell for the second quarter in a row. This decline played a role in limiting economic growth to 1.1% last quarter.
Despite easing inflation, underlying pressures on prices persist at levels that are not in line with the Fed’s 2% target. One major contributor to this is the tightness in the labor market.
The index of factory employment in the survey rose to 50.2 the previous month from 46.9 in March. Manufacturing payrolls have essentially stalled in the government’s closely monitored employment report, posting modest decreases in February and March.
