–Regional Data, Markit Survey Also Soft as Full COVID Impact Hit
–March Construction Spending Up on Home Remodeling
By Kevin Kastner
WASHINGTON (MaceNews) – The April ISM index Friday showed U.S. manufacturing sector activity contracted sharply, confirming the disappointing regional and Markit data that preceded it. Conditions are unlikely to improve until businesses are given the green light to reopen fully.
The headline PMI index fell to 41.5 from 49.1 in March, above expectations for a decline to 35.0 but reflecting widespread declines in most of the key components.
The headline index was again supported by a rise in the supplier deliveries index. The measure rises as deliveries slow, usually as sign of brisk business. That was partially true this month, as factories that make essential items such as PPE reported being overwhelmed by orders, slowing deliveries.
Additionally, there were issues with supply of needed parts due to global factory shutdowns, which impeded order fulfillment.
Survey respondents in the ISM report noted, with exception of essential services, factory activity slowed dramatically, in some cases nearly halting.
There were notable declines in the readings for new orders (27.1 vs 42.2 in March), production (27.5 vs 47.7) and prices (35.3 vs 37.4).
In addition, the employment index plunged to 27.5 from 43.8 in February, suggesting that manufacturing employment and hours worked could decline in next week’s April employment report.
The Markit manufacturing index, released earlier Wednesday, was revised down to 36.1 from 36.9 in the flash estimate and 48.5 in March, as conditions worsened later in the month.
Construction spending data for February, released at the same time as the ISM report, posted surprise increase. Many states have labeled construction as an essential business. Home remodeling accounted for most of the increase.
Overall construction spending rose by 0.9%, lifted by a 2.3% surge in private residential spending. Analysts had expected a 4.0% decline in the headline reading.
Calculations using the published data show that private new home construction fell by 1.3%. In contrast, home remodeling rose by 10.2%. Facing the prospect of weeks at home, some homeowners may have sought to begin those home projects. Look for more of this activity in the April data.
When private home remodeling is excluded from total construction, the headline figure would have declined by 0.5%.
Private nonresidential construction spending fell by 1.3%, with declines in almost every category as businesses planned for a long period of shutdown. Public construction spending rose by 1.6%, with both Federal and State and Local spending up in the month.
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Contact this reporter: kevin@macenews.com
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