Manufacturing grows for third straight month

Don Hogsett, Staff Staff, May 13, 2002

Climbing out of a long, recessionary trough, U.S. manufacturing grew for a third straight month in April — if at a somewhat slower pace than in March — signaling continued momentum in a resurgent economy.

The monthly index of the nation's purchasing managers, a key barometer of manufacturing activity, registered 53.9 in April, down modestly from the 55.6 percent put up in March, but still pointing to continued growth in the sector.

"Though the rate has slowed, a third consecutive month of growth in the manufacturing sector is certainly encouraging," said Norbert Ore, chairman of the Institute for Supply Management's Business Survey Committee, which compiles the monthly data. "The New Orders Index lost some momentum, but it is still strong enough to drive sector growth in the next several months."

For a second straight month, the long-battered textiles industry showed signs of rallying and was one of 18 out of 20 manufacturing sectors that grew during the month, said the Institute for Supply Management, the purchasing managers' trade group.

And even though the overall Employment Index remains soft — an April reading of 46.7 fell 1.7 percent from 47.5 in March — the textiles industry is starting to hire, said Ore. The textiles, primary metals and instruments and photographic equipment sectors "appear very aggressive in hiring at this point," he said.

"The overall picture shows growth in manufacturing activity during April and a good beginning for the second quarter," said Ore. "The Purchasing Managers Index indicates a third consecutive month of consecutive growth."

On a potentially troubling note, the Prices Index — a gauge of the prices manufacturers pay for the raw materials they use — continued to rise, said Ore, "indicating pricing power in some commodities." The Prices Index climbed to a reading of 60.3, up 16.2 percent from 51.9 in March.

In a snapshot of what's happening in the manufacturing sector, the purchasing managers reported that order backlogs grew for a third straight month, but at a slower pace than in March. The April reading of 56.0, was 10.4 percent beneath the March reading of 62.5.

The New Orders Index continued to grow, but also at a slower pace, with an April reading of 59.0 coming in 9.6 percent beneath the 65.3 recorded in March.

The Production Index continued to grow and scored a reading of 58.0, up slightly, by 0.3 percent, from the March figure of 57.8.

The rate of inventory liquidation slowed slightly in April, and the Inventories Index came in at 42.9, up 4.1 percent from a March level of 41.2.

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