Economic activity in the manufacturing sector continued to expand in April, according to the latest Institute for Supply Management (ISM) purchasing manufacturer’s index. While the PMI fell 2.4% from March, the report highlighted comments reflecting “stable to growing business conditions; with new orders, production, employment and inventories of raw materials all growing in April over March”. Employment in the sector is up by 50,000 jobs so far in 2017, a significantly better picture than the 16,000 jobs lost last year. US manufacturing currently employs 12.4 million workers, up from a low of 11.4 million in early 2010.
At 54.8%, the index in in the “growth” region, above the 50% neutral point indicating manufacturing growth, and the results marked the eighth straight month of increases.
One highlighted comment – “Business is definitely improving. Profit margins are increasing.” (Fabricated Metal Products) – was particularly good to see as we recently closed a sell-side transaction in the fabricated metal products industry.
The average year-to-date PMI of 56.4% suggests a robust 4.1% annual increase in gross domestic product (GDP), according to ISM calculations. The 54.8% index number for April suggests a 3.6% increase.
Alan Fullerton is a partner with Mirus Capital Advisors. He works with owners of middle market businesses and can be reached at email@example.com.