Markit and ISM’s April US Manufacturing PMIs Diverge



Ten years of expansion

While March’s PMI numbers came out on April Fool’s Day, April’s numbers came out on May Day today. The manufacturing PMI released by HIS Markit (INFO) rose to 52.6 in April from 52.4 in March. However, the manufacturing PMI released by the Institute of Supply Management (or ISM) saw a massive drop from 55.3 in March to 52.8 in April.

Both numbers indicated an expanding economy. However, the Markit number showed accelerating growth while the ISM number showed falling growth. The data mark 120 months of consecutive expansion in US manufacturing activity.

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The fine line

The ISM report said that the index of new orders, which form part of the headline PMI number we discussed above, fell by 570 basis points to 51.7. This fall means that the growth in new orders slowed down. On the other hand, the IHS Markit report said new orders were up.

The ISM production index, another component of the PMI reading, fell by 350 basis points to 52.3, which indicates that the output increased at a slower pace. On the other hand, the IHS Markit PMI showed a slight increase in output growth.

Both reports were on the same page about employment. Although the manufacturing workforce continued to expand, the pace was much slower in April. ISM said the employment index was down 510 basis points to 52.4.

The ISM report pointed to a contraction in export orders as well as imports. This change could have resulted from the ongoing trade war between the United States and China.

How did markets react?

The manufacturing-heavy Dow Jones (DIA) is marginally up, and so is the broader S&P 500 (SPY). The US Dollar Index was down by 16 basis points, indicating a weaker US dollar.


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