With the Chicago PMI yesterday beating wildly, the whisper expectation today, in a world in which baffle with BS is the dominant strategy (aside for "hope" of course), that the manufacturing ISM would be a modest miss. It wasn't, and instead while consensus expected the April ISM to rise from 53.7 to 54.3, the final print instead ended up being 54.9, with an increase reported in most indexes, except for Production, Prices and and Order Backlogs. Ahead of tomorrow's NFP, the increase in employment by 3.6 points from 51.1 to 54.7 is notable. Finally, with exports rising only 1.5% compared to the 3.5% increase in imports, the trade component of Q2 GDP is not looking like it is improving much.
The full breakdown by ISM component:
Here is the take of ISM's Bradley Holcomb: "The April PMI® registered 54.9 percent, an increase of 1.2 percentage points from March's reading of 53.7 percent, indicating expansion in manufacturing for the 11th consecutive month. The New Orders Index registered 55.1 percent, equal to the reading in March, indicating growth in new orders for the 11th consecutive month. The Production Index registered 55.7 percent, slightly below the March reading of 55.9 percent. Employment grew for the 10th consecutive month, registering 54.7 percent, an increase of 3.6 percentage points over March's reading of 51.1 percent. Comments from the panel generally remain positive; however, some expressed concern about international economic and political issues potentially impacting demand."
Additionally as the report added, of the 18 manufacturing industries, 17 are reporting growth in April in the following order: Apparel, Leather & Allied Products; Primary Metals; Furniture & Related Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; Transportation Equipment; Fabricated Metal Products; Machinery; Printing & Related Support Activities; Plastics & Rubber Products; Textile Mills; Chemical Products; Computer & Electronic Products; Wood Products; Paper Products; Petroleum & Coal Products; and Electrical Equipment, Appliances & Components. The only industry reporting contraction in April is Nonmetallic Mineral Products.
Curious what commodities are going up in price? According to the ISM it is Aluminum; Butter; Dairy; Electrical Components; Lumber; Nickel; Plastic Resins; Stainless Steel; Steel; Steel — Cold Rolled; Steel — Hot Rolled; and Wood Pallets. The only commodity reported in short supply is Truck Freight Services.
Finally, the always entertaining and quite cherry picked respondents:
- "Business is strong and continues to grow in my industry." (Textile Mills)
- "Winter weather has slowed order intake but not inquiries. We think there is pent-up demand waiting for the weather to break." (Fabricated Metal Products)
- "U.S. remains stable, Asia is increasing in sales dramatically and Europe remains soft." (Transportation Equipment)
- "Overall business is up. Hiring is also up. Skilled trades in short supply." (Transportation Equipment)
- "Slight improvement in defense spending and manufacturing." (Computer & Electronic Products)
- "Export demand picking up but seems to have no leverage to raise prices. Margins are very thin, and concerned about Chinese slowdown effect on our business." (Chemical Products)
- "China returned from their New Year holiday with brisk demand. Domestic markets are also doing well." (Wood Products)
- "Softening in bookings, shipments at same level." (Electrical Equipment, Appliances & Components)
- "Spring of 2014 is 3 to 4 percent better than Spring of 2013 for our company." (Machinery)
- "Russia may stop importing medical devices manufactured completely outside of Russia. Would have big negative impact — 5 to10 percent lost revenue." (Miscellaneous Manufacturing)