PMI Manufacturing goes from bad to worse

Survey record decline in production

Output expectations turn negative for first time in the series history

New orders, employment and inventories fall at steepest rates since the global financial crisis


April data signalled an unprecedented contraction in production across the U.S. manufacturing sector, overwhelmingly linked to measures implemented to contain the COVID-19 outbreak.
Factory closures were widely reported and the frequent cancellation or postponement of orders resulted in the largest monthly drop in the new orders index on record. Spare capacity across the sector and pessimism about the year ahead meanwhile resulted in the fastest fall in employment since
March 2009, despite efforts to furlough staff. Both input costs and output charges fell sharply as companies and their suppliers offered discounts to boost sales.

The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index™ (PMI™) posted 36.1 in April, down from 48.5 in March and the previously released 'flash' figure of
36.9. The headline reading was the lowest for just over eleven years, despite being buoyed by the greatest deterioration in suppliers’ delivery times since data collection began in May 2007 (ordinarily a signal of improving manufacturing demand but currently the result of virus-related supply constraints).
Driving the headline figure down was the steepest decline in output in the series history. The unprecedented contraction in production was widely linked to factory and other business closures following the implementation of COVID-19 related emergency public health measures.

New orders decreased at the most marked pace since January 2009, as customers reportedly cancelled or postponed ordersv amid a broad-based contraction in consumer and business spending. Domestic and foreign client demand declined, with new export orders falling at the quickest rate in the series
history. Lower sales from abroad were attributed to the global nature of the pandemic escalation, with numerous key export markets badly affected.