#582 – Manufacturing Momentum Fades but Export Orders Stop Up

Posted on | The Agurban

The ISM Manufacturing Index is an indicator of potential activity we might find in the marketplace. When the index is on the rise, the possibility of expansion activity and new construction increases. Below is an excerpt from a recent article from Investor’s Business Daily…

Manufacturing Momentum Fades but Export Orders Step Up

The Institute for Supply Management manufacturing index eased to 50.8 in April from 51.8 in March, but it remained positive for a second straight month.

Economists had predicted a slight decline to 51.5 amid less-robust reports on regional manufacturing activity last month. Readings above 50 indicate expansion, while those below 50 point to contraction.

ISM Index

The undershooting in April largely reflected excess inventories, which may keep keep a lid on the upturn in production in coming months.

But the good news for U.S. manufacturing and for corporate earnings is that the dollar continues to lose ground. The U.S. dollar index edged lower Monday after ending the week at its weakest close since January 2015, down nearly 7% from its first-quarter high. The euro rose above $1.15 to the dollar for the first time since August. The Japanese yen is at 18-month highs.

Rising oil prices may stabilize energy-related manufacturing activity, though the petroleum and coal sector was one of four industries showing declines last month, ISM said. Transportation equipment manufacturing also saw a contraction. Eleven industries expanded, including computer and electronic products, though one survey respondent said that the sector “as a whole continues to struggle greatly.”

Full article.