US manufacturing PMI signals stability in April 2024: S&P Global

Manufacturing new orders decreased for the first time in four months during April, albeit modestly. Respondents signalled caution among clients and a reluctance to commit to new business amid subdued market conditions. The reduction in total new business was recorded in spite of sustained growth in new export orders. New business from abroad increased for the third month running, but only slightly.

Manufacturing production increased for the third consecutive month, albeit at the slowest pace in this sequence. With new orders down, output was often supported by work on previously received orders, as per S&P Global.

Work on backlogged orders led to a further depletion of outstanding business, with the latest solid decline the most pronounced since January.

The latest expansion in manufacturing production was supported by a fourth successive month of job creation, with the pace of hiring quickening to the fastest in nine months. According to respondents, the increase in employment reflected the replacement of leavers and positive expectations regarding output requirements in the months ahead.

Indeed, firms remained confident that production will rise over the coming year, in part linked to capacity expansions but also hopes that demand conditions will improve. That said, the reduction in new business in the latest survey period acted to dampen optimism, with sentiment at a fivemonth low.

While staffing levels were raised over the month, manufacturers scaled back their purchasing activity in response to the reduction in new orders.

The fall in purchasing and a general reluctance to hold excess inventories at a time of declining new orders fed through to a further solid reduction in stocks of purchases, with the pace of depletion the most marked since last November.

On the other hand, stocks of finished goods increased marginally following a fall in March. The reduction in new orders meant that finished products were sometimes kept in stock awaiting sale.

Input costs increased sharply, with the rate of inflation quickening for the second consecutive month. Higher prices for oil and metals were mentioned in particular. The overall rise was much slower than those seen during 2021 and 2022, but the second-highest seen over the past year. Meanwhile, output prices increased solidly, but to the least extent in three months.

Reduced demand for inputs and sufficient stock holdings at suppliers resulted in a further shortening of lead times on the delivery of purchased items, the third in as many months. The rate of improvement was only marginal, however.

Fibre2Fashion News Desk (DP)