Washington: A measure of US factory output shrank in April at the fastest pace in records back to 1948, prompting a sharp reduction in manufacturing employment as the coronavirus tightened its grip on the economy.
Data from the Institute for Supply Management on Friday showed its measure of factory production plummeted more than 20 points to 27.5, while its employment index also slid to 27.5, the weakest in almost 71 years. Readings below 50 indicate shrinking activity and the latest figures indicate an economy that’s rapidly deteriorated into a recession.
The ISM’s headline manufacturing measure fell less than forecast — a more-moderate 7.6 point decline to an 11-year low of 41.5 — supported by a further increase in delivery times. While longer lead times can often indicate elevated demand, the highest supplier deliveries index since 1974 reflects virus-related disruptions in supply lines and business closures.
“The delivery issues were the result of disruptions in domestic and global supply chains, driven primarily by supplier plant shutdowns,” Timothy Fiore, chair of the ISM’s manufacturing survey committee, said in a statement.
The median forecast in a Bloomberg survey of economists called for a decline to 36 in the overall ISM factory index.
Just two industries — paper products and food — out of 18 reported growth in April, the fewest in 11 years.
The supply managers group’s index of new orders also weakened substantially last month. The measure fell 15.1 points, the most since 1951, to 27.1. The gauge of manufacturers’ inventories, the final component used to calculate the overall ISM index, showed stockpiles declined at a slightly slower pace.
The ISM’s export orders gauge dropped to the second-lowest level on record, underscoring weaker trade and collapsing worldwide economies.
The group’s gauge of prices edged down to a more than four-year low on weaker demand for commodities, including crude oil.