April 2014 ISM Reports

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According to the Institute for Supply Management’s (ISM) monthly opinion survey, expansion of economic activity in the U.S. manufacturing sector expanded again in April. The PMI registered 54.9 percent, an increase of 1.2 percentage points from March's 53.7 percent (50 percent is the breakpoint between contraction and expansion). ISM’s manufacturing survey represents under 10 percent of U.S. employment and about 20 percent of the overall economy. Continued growth in the export and import sub-indices were the main sources of support for the idea of improving conditions.

“Comments from the [respondent] panel generally remain positive,” said Bradley Holcomb, chair of ISM’s Manufacturing Business Survey Committee; “however, some expressed concern about international economic and political issues potentially impacting demand.”

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Wood Products expanded in April, thanks to gains in employment. Paper Products grew, with widespread support among the sub-indices.

The non-manufacturing sector, which accounts for 80 percent of the economy and 90 percent of employment, picked up the pace of expansion in April. The NMI registered 55.2 percent, 2.1 percentage points higher than March’s 53.1 percent. Two sub-indexes in the NMI – the Business Activity Index (“Overall activity” in the table below) and the New Orders Index – have good correlations to the economy; both grew faster.

“The majority of survey respondents' comments indicate that both business conditions and the economy are improving,” said Anthony Nieves, chair of ISM’s Non-Manufacturing Business Survey Committee.

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All three of the individual service industries we track expanded in April, with near-universal improvement in employment and orders (whether new, backlogged and import/export).

Commodities up in price included lumber, building materials, wood pallets, diesel and gasoline, copier paper, paper products, and natural gas. Commodities down in price included spruce studs. No relevant commodities were in short supply.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.