Declining Manufacturing PMI: Is US Soft on Business?
US business condition in April
The April 2017 US Manufacturing PMI (Purchasing Managers’ Index) report indicates a softening environment in US businesses. It was 52.8 in April compared to 53.3 in March. However, it met the preliminary reading of 52.8. It’s been falling gradually since February 2017.
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The US Manufacturing PMI showed a gradual improvement until January 2017. In February, March, and April, it showed some slowdown, but the figure was in the expansion zone. A level above 50 indicates expansion in activity, while anything below 50 indicates contraction.
Let’s look at some of the key factors in the April manufacturing PMI:
- Production volume rose at a slower rate in April 2017 than in March 2017.
- Employment in the manufacturing sector showed a little improvement.
- New order growth and output showed soft improvement as export sales showed a subdued performance.
According to the Bureau of Labor Statistics, nearly 32.0% of US labor was engaged in the manufacturing sector in 1953, and in 2015, it fell to 8.7%. These figures make you think more seriously about economic (VOO) (IVV) (QQQ) growth and particularly the manufacturing sector.
Performance of various ETFs in April
The Industrial Select Sector SPDR ETF (XLI), which tracks the performance of the US industrial sector, rose 2.1% in April 2017. The SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500 Index, rose nearly 1.1% in April 2017.
In the next part of this series, we’ll analyze the performance of the Germany Manufacturing PMI in April 2017.