- US factory production plummeted in April to its lowest level on record going back to 1948, according to a Friday report from the Institute for Supply Management.
- The ISM’s production index fell more than 20 percentage points to 27.5 in April. Any reading below 50 signals a contraction.
- The April report is the second straight month where the coronavirus pandemic and global energy market weakness have impacted all manufacturing sectors, Timothy Fiore, chair of the ISM’s manufacturing survey committee, said in a press release.
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The coronavirus pandemic sent US factory production plummeting in April to its lowest level in records dating back to 1948, according to a Friday report from the Institute for Supply Management.
The ISM production index fell more than 20 points to 27.5 in April, the report showed. Any reading under 50 signals a contraction, meaning that the latest monthly figures show a deep economic recession.
The headline manufacturing measure fell to an 11-year low of 41.5 points in April from 49.1 in March. The plunge exceeded the median economist estimate of 36 points, according to Bloomberg data.
But the better-than-expected result is nothing to cheer — the entire index was boosted by a jump in supplier deliveries to 76 points in April from 64 in March.
“Delivery times are rising because the supply chain is closed; this is bad news, but the survey is intended to capture tight supply chains when demand is strong, so it sees any increase in the delivery times index as a positive,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a Friday note.
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The employment index also posted a sharp drop, falling to 27.5 in April from 43.8 in March. It’s the weakest reading for the index in 71 years. It shows that coronavirus-induced layoffs have extended beyond entertainment, restaurants, and hospitality, the first industries to be hit by the crisis.
The April report is the second straight month where the coronavirus pandemic and global energy market weakness have impacted all manufacturing sectors, Timothy Fiore, chair of the ISM’s manufacturing survey committee, said in a press release.
“Among the six big industry sectors, Food, Beverage & Tobacco Products remains the strongest. Transportation Equipment and Fabricated Metal Products are the weakest of the big six sectors,” Fiore said.
Only two of the 18 manufacturing industries surveyed reported growth in April — paper products and food. The remainder of the industries all reported contractions in the month.
In addition, comments from the panel were largely negative, according to Fiore. There were at least three negative comments for every one positive comment, he said.