Economic Report: S&P Global: Manufacturing Activity Strengthened in April Despite Challenges

AICC, through its membership in the Council of Manufacturing Associations, is pleased to present the "Monday Economic Report" from the NATIONAL ASSOCIATION OF MANUFACTURERS (NAM).

By Chad Moutray, Ph.D., CBE – April 18, 2022

 NAM Weekly Economic Toplines:

The S&P Global Flash U.S. Manufacturing PMI rose to 59.7 in April, the best reading since September, with key measures strengthening, proving that manufacturing activity remained resilient despite numerous challenges. Still, the index for future output eased to a six-month low, even as it continued to point to optimism about production growth moving forward. Manufacturers continued to cite supply chain bottlenecks and workforce shortages as significant challenges to growth, and inflation remained highly elevated, with output prices soaring to a new all-time high and input costs not far from November’s record high. Meanwhile, the S&P Global Flash Eurozone Manufacturing PMI decreased from 56.5 in March to 55.3 in April, the weakest reading since January 2021. The Russian invasion of Ukraine negatively impacted activity, with new orders and output expanding at the slowest pace since June 2020 and exports contracting for the second straight month. The Philadelphia Federal Reserve Bank’s composite index declined from 27.4 in March to 17.6 in April but continued to signal expanding growth in the manufacturing sector in the district. Hiring grew at the fastest pace in the survey’s history, which dates to May 1968. Raw material costs also picked up solidly in April, expanding at a pace not seen since June 1979. Yet, respondents to the Philly Fed’s survey felt less optimistic in their outlook and orders, with the forward-looking composite index dropping to the lowest reading since December 2008. The average fixed-rate 30-year mortgage was 5.11% this week, up from 3.11% at the end of 2021 and the highest since Thursday, April 8, 2010, according to Freddie Mac. Nonetheless, new housing starts proved to be quite resilient, edging up 0.3% to 1,793,000 units at the annual rate in March, the fastest pace since June 2006, largely on multifamily activity. Single-family starts declined 1.7% from 1,221,000 units to 1,200,000 units. The housing market continues to be challenged by rising building costs, higher mortgage rates, affordability issues and difficulties in finding workers. For their part, builders felt less optimistic in their outlook, with inflation, affordability and higher rates pushing the NAHB Housing Market Index to a seven-month low in April. Nonetheless, housing permits increased 0.4% to an annualized 1,873,000 units in March, which was just shy of January’s reading (1,895,000 units), which was the best reading since May 2006, consistent with still-healthy growth in housing construction despite numerous challenges and slower single-family activity. Existing home sales fell 2.7% to 5.77 million units at the annual rate in March, the slowest pace since June 2020. On a year-over-year basis, existing home sales fell 4.5% from 6.04 million units in March 2021. With that said, the median sales price was $375,300 in March, an all-time high and up 15.0% from $326,300 one year ago. There were 1,417,000 continuing unemployment insurance claims for the week ending April 9, the lowest level since the week ending Feb. 21, 1970. READ REPORT