Skip to content

Manufacturing Softens on Supply Chain Issues

Bill Koenig
By Bill Koenig Senior Editor, SME Media

The manufacturing economy slowed in April as supply chain issues such as transportation of goods complicated operations, the Institute for Supply Management said today.

The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, fell to 55.4 percent last month, down from 57.1 percent in March.

A PMI level above 50 percent indicates the manufacturing economy is expanding. Below 50 percent indicates economic contraction.

The April PMI was the lowest since July 2020’s 53.9 percent. The index has averaged 59.3 percent in the past 12 months.

“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said in a statement.

“In April, progress slowed in solving labor shortage problems at all tiers of the supply chain,” he added.

Ports remain clogged with ships waiting to receive and transport products. In China, a lockdown in Shanghai related to COVID-19 has slowed down shipments for exports.

“That’s a real headwind,” Fiore said on a conference call today. “Transportation challenges remain elevated…If it weren’t for COVID in Asia, I’d be more optimistic.”

At the same time, Fiore said “there’s no indication” the U.S. economy is going into recession. The first-quarter U.S. economy contracted by 1.4 percent. A recession occurs when the gross domestic product declines over two consecutive quarters.

The PMI is based on a survey of executives in 18 industries. Seventeen industries reported economic expansion in April, including machinery, transportation equipment, primary metals and fabricated metal products. The only industry reporting a decrease was petroleum & coal products.

ISM’s New Orders Index slipped to 53.5 percent in April from 53.8 percent the month before. New orders are considered important because they have an impact on production later. Eleven industries reported increased new orders, the group said.

The institute’s Production Index declined to 53.6 percent in April from 54.5 percent in March. Fourteen industries reported an increase in output.

ISM’s Employment Index registered at 50.9 percent last month, down from 56.3 percent in March. Nine industries reported adding jobs.

Fiore said the Employment Index showed that manufacturers continue to have difficulty hiring new workers.

“There’s no indication we’re stopping hiring at all,” Fiore said.

  • View All Articles
  • Connect With Us

Always Stay Informed

Receive the latest manufacturing news and technical information by subscribing to our monthly and quarterly magazines, weekly and monthly eNewsletters, and podcast channel.