U.S. manufacturing sector sees slower growth in April amid continued supply constraints

Workers make face masks at a face mask factory in the City of Vernon, Los Angeles County, California, the United States, April 16, 2020. (Xinhua)

"The slowdown in the ISM manufacturing index indicated the sector expanded at the slowest pace of activity in over a year-and-a-half," economists said.

WASHINGTON, May 2 (Xinhua) -- The U.S. manufacturing sector saw slower growth in April amid continued supply chain bottlenecks, the Institute for Supply Management (ISM) reported Monday.

The Purchasing Managers' Index (PMI) stood at 55.4 percent, down 1.7 percentage points from the March reading. Any reading above 50 percent indicates the manufacturing sector is generally expanding.

"The slowdown in the ISM manufacturing index indicated the sector expanded at the slowest pace of activity in over a year-and-a-half," Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, wrote in an analysis.

"Still-strained supply chains appear to be the reason for the pullback in activity, but there are hints sprinkled throughout the report of demand slowing more broadly in the sector," Quinlan and Seery said.

The New Orders Index registered 53.5 percent, down 0.3 percentage point compared to the March reading, according to the ISM report. The Production Index registered 53.6 percent, down 0.9 percentage point compared to the March reading.

The Backlog of Orders Index, meanwhile, registered 56 percent, 4 percentage points lower than the March reading, the report showed. The Employment Index registered 50.9 percent, 5.4 percentage points lower than the March reading.

The Supplier Deliveries Index registered 67.2 percent, an increase of 1.8 percentage points compared to the March figure, indicating slower deliveries and increased supply chain congestion.

"The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment," said Timothy Fiore, chair of the ISM's manufacturing business survey committee.

Fiore also noted that "progress slowed in solving labor shortage problems" at all tiers of the supply chain in April, adding that there is "a slight easing" of prices expansion.

A purchasing manager form the machinery industry said new order entries are still "very strong," but "unfortunately," logistics issues have not yet improved, so lead times "remain extended."

"Due to electronic component supply chain issues, production output has been lower than normal," said an executive from the fabricated metal products industry. "Backlog is growing due to the supply chain issues."

Noting that business is still "very robust," an executive from the plastics &rubber products industry said that material price increases continue to be "passed on" to customers based on costs of raw materials, logistics and labor to produce products.