US economy growth slows in April

6 May 2011

US manufacturers look to bring operations back onshore
 

"Significant recovery" for most of US manufacturing sector 
 

Manufacturing PMI sees record growth
 

Commodity prices
 
Europe's productivity growth at 14-month low

7 May 2011 | Angeline Albert

The US manufacturing sector continued its rapid expansion in April creating slower supplier delivery times and rising commodity prices.

But growth was slightly slower than the previous month in both the production and non-manufacturing sectors.

The latest monthly Manufacturing Report on Business from the Institute for Supply Management (ISM) showed economic activity in the sector rose for the twenty-first consecutive month in April due to a increase in new orders.

According to ISM’s report, which is based on data from purchasing and supply executives in the US, April’s Purchasing Managers’ Index was 60.4 per cent and has been above 60 per cent for the last four months. But the growth was at a marginally slower rate than March's reading of 61.2 per cent.

Production, employment and inventories in the sector increased, but the delivery performance of suppliers slowed in April, registering 60.2 per cent, compared with March’s 63.1 per cent. None of the manufacturing industries reported faster deliveries last month.

The commodities in short supply included capacitors used in electronic circuit boards. Buyers reported the rising price of rubber, aluminium, brass, cocoa, copper, fuel, electronic parts, plastics, silver and stainless steel.

“We are seeing price increases in many areas and the lead times are stretching out," one purchaser told the report. "Pressure from offshore suppliers continues to mount with exchange rate increases and seasonal demand for capacity," said another.

Norbert Ore, chair of the ISM Manufacturing business survey committee, said: “Manufacturing employment appears to have developed significant momentum, as the employment index readings for the first four months of 2011 are the highest readings in the last 38 years. While the manufacturing sector is definitely performing above most expectations so far in 2011, manufacturers are experiencing significant cost pressures from commodities and other inputs."

April’s Non-Manufacturing Report on Business recorded a figure of 52.8 per cent, a lower figure than March’s 57.3 per cent. According to the non-manufacturing index, 17 industries reported growth last month but purchasers’ again showed concern over rising commodity costs.

Taking the results of both reports into account, the US economy grew for the twenty-third consecutive month in April.

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