U.S. manufacturing business conditions rebound in April, flash PMI index rises to 56.5

U.S. manufacturers reported the greatest rebound in the overall business conditions since September 2014 in April. This was seen in the flash PMI index that rose to 56.5 in April from March’s 55.6. Notable growth in output and new orders stimulated the headline PMI, with new orders rising at the most rapid pace in more than three-and-a-half years.

A steeper fall in vendor performance also lifted the headline index. More solid growth in new orders drove a strong rise in the level of outstanding business at manufacturers. However, strong client demand and signs of sustained pressure on capacities did not lead to improved employment growth. The pace of job creation eased to an 8-month low as companies reportedly pushed for greater efficiency.

Price pressures in the factory sector intensified, with the pace of input cost inflation rising to the most rapid since June 2011. Cost rises were partially attributed by producers to the introduction of tariffs. Furthermore, greater client demand and higher raw material prices supported the most rapid rise in average selling prices for nearly seven years.

Consistent with greater production requirements, companies hinted at the strongest rise in purchasing activity since September 2014. Survey respondents noted that lengthening delivery times was an important factor leading companies to increase their buying activity. Moreover, average supplier performance deteriorated at the joint-fastest pace in the series history. Longer lead times were attributed to demand exceeding supply but also partially linked by panelists to new trucking regulations, stated IHS Markit.

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