US ISM manufacturing index dropped to 57.3 in April, down from 59.3 and missed expectation of 58.5. That’ the lowest level in 9 months. Price paid component rose to 79.3, up from 78.1 and beat expectation of 76.8. That’s the highest level since April 2011. Employment component dropped to 54.2, down from 57.3.
Some comments from respondents:
- “We are seeing strong sales in the U.S., Europe and Asia.” (Chemical Products)
- “Business is off the charts. This is causing many collateral issues: a tightening supply chain market and longer lead times. Subcontractors are trading capacity up, leading to a bidding war for the marginal capacity. Labor remains tight and getting tighter.” (Transportation Equipment)
- “Shortages of trucks and drivers has impacted delivery times.” (Food, Beverage & Tobacco Products)
- “The recent steel tariffs have made it difficult to source material, and we have had to eliminate two products due to availability and cost of raw material.” (Fabricated Metal Products)
- “Demand is up for products. Commodity pricing for steel and other materials increased due to the proposed tariffs. We are seeing commodity futures coming down. A lot of suppliers are asking for increases, and the team is battling those requests.” (Machinery)
- “[The] 232 and 301 tariffs are very concerning. Business planning is at a standstill until they are resolved. Significant amount of manpower [on planning and the like] being expended on these issues.” (Miscellaneous Manufacturing)
- “Production orders at this time are still strong and being driven partially by construction factors and customers purchasing ahead to avoid potential price increases.” (Plastics & Rubber Products)
- “The general outlook for 2018 remains positive and upbeat as we see continued signs of a growing economy and investment in housing and infrastructure.” (Nonmetallic Mineral Products)
- “Business conditions have been good; order book is full and running around 98 percent capacity.” (Primary Metals)
- “Backorders remain strong. New order rate exceeds shipment rate.” (Computer & Electronic Products)
Dollar shrugs off the weaker than expected headline number and slowing in employment component. Instead, it seems to be reacting to upside surprise in price paid. The greenback is extending recent rally, and even overwhelms Canadian Dollar.
