May 3, 2023

The following are diffusion indices, based on business surveys, which means that >50 indicates expansion and <50 indicates contraction, and 50 indicates no change. A larger or small number indicates breadth, not intensity, among survey respondents.

ISM Manufacturing Index rebounded +0.8 points in April to 47.1, but remained in its 6th straight month of contraction.

Manufacturing employment returned to a slightly positive reading, along with customer inventories, but all other subindices remain in contraction.

US companies responding to the ISM Manufacturing survey in April reported a complex and challenging picture, with disrupted supply chains still working themselves out, while demand (in some areas, but not others) softens.

The S&P US Manufacturing PMI rose +1.0 points in April to 50.2, its first expansion reading in six months. However, price pressure also seemed to return.

S&P’s economists made the following observations:

The ISM Services Index covers a broader range of the U.S. economy. It rebounded +0.7 points in April to a still rather tepid 51.9 reading.

Most subindices are in modest expansion territory. New orders rose +3.9 points in April to 56.1, suggesting more positive momentum going forward (particularly from new export orders, which surged +17.2 points to 60.9). However, upward price pressure remains strong (though significantly diminished) at 59.6.

Companies responding to the ISM Services survey in April indicate that inflation and uneven, volatile conditions have made businesses cautious in their outlook.

S&P’s US Services PMI rose +1.0 points in April to 53.6, suggesting that the economy is cautiously regaining some momentum.

S&P economists see encouraging signs, but also worry that renewed growth could reignite inflationary price pressures.