Tucson CitizenTucson Citizen

Report shows slower manufacturing contraction

PITTSBURGH – U.S. manufacturing activity contracted at a slower-than expected pace in April, according to figures from a private trade group that suggest the economic decline may be moderating. The performance was driven by a rise in new orders.

The Institute for Supply Management, a trade group of purchasing executives, said Friday its manufacturing index rose to 40.1 in April from 36.3 in March. A reading below 50 indicates a contraction. It was the 15th consecutive month of contraction in the manufacturing sector.

Wall Street economists had expected the index to rise to 38 in April, according to survey by Thomson Reuters.

The index, based on a survey of members of the Tempe, Ariz.-based group, fell steadily as the economy deteriorated late last year, hitting a 28-year low in December. It covers indicators including new orders, production, employment, inventories, prices, and export and import orders.

The report showed inventories contracted for the 36th straight month in April, though at a slower pace, rising 1.4 percent to 33.6 from 32.2.

The new orders index contracted for the 17th consecutive month, but the reading of 47.2 was up 6 percentage points from March.

“The decline in the manufacturing sector continues to moderate,” said Norbert J. Ore, chairman of ISM’s manufacturing business survey committee. “While this is a big step forward, there is still a large gap that must be closed before manufacturing begins to grow once again.”

Consumer spending — a crucial source of demand for manufacturers — fell more than expected in March after two straight monthly gains, the Commerce Department said Thursday. Incomes, reflecting persistent mass layoffs, also were worse than expected.

Economists closely watch consumer spending because it accounts for 70 percent of total economic activity.

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