WASHINGTON (MarketWatch) — U.S. manufacturers scaled back hiring plans in April and demand for new products abated, but most companies said business was still quite brisk, a survey of executives found.
The Institute for Supply Management said its manufacturing index slipped to 54.8% in April from 57.2%. It also fell short of the 56.5% forecast of economists surveyed by MarketWatch.
Still, readings over 50% indicate more companies are expanding instead of shrinking. Some 16 of 18 industries tracked by ISM said they grew in March.
After a lull that lasted through 2015 and most of 2016, manufacturers have reported a sharp improvement in business. In March the ISM index hit a nearly three-year high amid optimism about the steps a pro-business Trump administration was taking to gin up the economy.
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What’s also helped is a stronger global economy, a rebound in the U.S. oil patch after prices rose and a somewhat lower value of the dollar. A big increase in the value of the dollar help curbed demand for American-made goods in 2015 and 2016 because it made them more expensive.
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Still, executives appear to have tempered some of their optimism.
The ISM’s employment index retreated to 52% in April from a 58.9% reading in March that was the highest in almost six years. The decline might be also a sign that hiring in the U.S. could be soft for a second straight month. The government will issue April employment results on Friday.
The index for new orders, meanwhile, also slid, to 57.5% from 64.5% in March, which matched a nine-year high.
“Business is solid,” said an executive at a manufacturer of furniture. Added another corporate VIP: “While world and political headlines cause personal anxiety, business conditions remain solid.”
Economists said a pullback in the index was likely after excessively high readings earlier in 2017 that were not supported by increases in U.S. production.
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The ISM index is compiled from a survey of executives who order raw materials and other supplies for their manufacturing companies. The gauge tends to rise or fall in tandem with the health of the broader economy.