ISM Manufacturing Index: Down 7.6 In April, Better Than Forecast

The morning of May 1st, the Institute for Supply Management published its monthly Manufacturing Report for April. The latest headline Purchasing Managers Index (PMI) was 41.5, a decrease of 7.6 from 49.1 the previous month. Today's headline number was above the Investing.com forecast of 36.9%.

Here is the key analysis from the report:

"The April PMI® registered 41.5 percent, down 7.6 percentage points from the March reading of 49.1 percent. The New Orders Index registered 27.1 percent, a decrease of 15.1 percentage points from the March reading of 42.2 percent. The Production Index registered 27.5 percent, down 20.2 percentage points compared to the March reading of 47.7 percent.

The Backlog of Orders Index registered 37.8 percent, a decrease of 8.1 percentage points compared to the March reading of 45.9 percent. The Employment Index registered 27.5 percent, a decrease of 16.3 percentage points from the March reading of 43.8 percent. The Supplier Deliveries Index registered 76 percent, up 11 percentage points from the March reading of 65 percent, limiting the decrease in the composite PMI®."

Here is the table of PMI components.

The chart below shows the Manufacturing Composite series, which stretches back to 1948. The 11 recessions during this time frame are indicated, along with the index value the month before the recession starts.

For a diffusion index, the latest reading is 41.5 and indicates contraction. What sort of correlation does that have with the months before the start of recessions? Check out the red dots in the chart above.

Here is a closer look at the series, beginning at the turn of the century.