Manufacturing last month contracted at the fastest rate since April 2009 as the novel coronavirus (COVID-19) walloped the economy, the Institute for Supply Management said today.
The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, nosedived to 41.5 percent, down from 49.1 percent in March. An index reading below 50 percent indicates economic contraction.
Parts of the PMI showed even more dramatic declines, including new orders, production and employment.
States issued stay-at-home orders to slow the spread of COVID-19. That has hurt the economy overall. Aerospace and automotive plants shut down, with companies seeking ways to reconfigure production lines to boost safety amid the pandemic.
“This is the fastest rate of change in modern times,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call.
ISM said compiling its PMI report for March was difficult because conditions were changing rapidly because of COVID-19. With the April data, he said, “I think we understand the industries and markets that have been hurt…. I think we can see the bottom of the hill.”
Climbing up from that bottom won’t be easy, he added.
“No, I don’t see a fast rebound,” he said. The aerospace industry has been hit as airlines cut their schedules because of COVID-19 and air traffic is forecast to remain at depressed levels.
Manufacturing also will have to deploy workers differently as work resumes, with employees working further apart to avoid infection from the virus, he said.
“Factory output will be subdued for some time,” Fiore said.
The PMI is based on a survey of 350 purchasing and supply executives across 18 industries. It’s considered a leading indicator and is seen as a barometer where manufacturing is heading.
The PMI has averaged 49 percent the past 12 months. The index has been below 50 percent in seven of those months.
In April, only two industries – paper products and food and beverage products – reported expansion. Fifteen reported economic contraction. Overall, respondents had three negative comments for every positive comment.
The group’s New Orders Index plunged to 27.1 percent in April from 42.2 percent the month before. Only food and beverage products and paper products reported a gain in new orders.
The Production Index slid to 27.5 percent last month from 47.7 percent in March. The Employment Index registered at 27.5 percent, down from 43.8 percent in March.