ISM: Manufacturing Contracts in April; PMI at 41.5%

Economic activity in the manufacturing sector contracted in April, and the overall economy contracted after 131 consecutive months of expansion, say the nation’s supply executives in the latest Manufacturing ISM Report on Business.

Timothy R. Fiore, CPSM, C.P.M., chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee, said: “The April PMI registered 41.5%, down 7.6 percentage points from the March reading of 49.1%. The New Orders Index registered 27.1%, a decrease of 15.1 percentage points from the March reading of 42.2%. The Production Index registered 27.5%, down 20.2 percentage points compared to the March reading of 47.7%. The Backlog of Orders Index registered 37.8%, a decrease of 8.1 percentage points compared to the March reading of 45.9%. The Employment Index registered 27.5%, a decrease of 16.3 percentage points from the March reading of 43.8%. The Supplier Deliveries Index registered 76%, up 11 percentage points from the March reading of 65%, limiting the decrease in the composite PMI.

“The Inventories Index registered 49.7%; 2.8 percentage points higher than the March reading of 46.9%. The Prices Index registered 35.3%, down 2.1 percentage points compared to the March reading of 37.4%. The New Export Orders Index registered 35.3%, a decrease of 11.3 percentage points compared to the March reading of 46.6%. The Imports Index registered 42.7%, a 0.6-percentage point increase from the March reading of 42.1%.

“Comments from the panel were strongly negative (three negative comments for every one positive comment) regarding the near-term outlook, with sentiment clearly impacted by the coronavirus (COVID-19) pandemic and continuing energy market recession. The PMI indicates a level of manufacturing-sector contraction not seen since April 2009, with a strongly negative trajectory. Demand contracted heavily, with the (1) New Orders Index contracting at a very strong level, again pushed by new export order contraction, (2) Customers’ Inventories Index approaching a level that is considered a negative for future production, and (3) Backlog of Orders Index strongly contracting, in spite of a lack of production during the period. Consumption (measured by the Production and Employment indexes) contributed negatively (a combined 36.5-percentage point decrease) to the PMI calculation, with activity dramatically contracting due to plant closures and lack of demand. Inputs — expressed as supplier deliveries, inventories and imports — strengthened again due to supplier delivery issues that were partially offset by continuing imports sluggishness. The delivery issues were the result of disruptions in domestic and global supply chains, driven primarily by supplier plant shutdowns. Inventory contraction slowed due to throughput issues. Inputs contributed positively (a combined 13.8-percentage point increase) to the PMI calculation. (The Supplier Deliveries and Inventories indexes directly factor into the PMI; the Imports Index does not.) Prices continued to contract (and at a faster rate in April), supporting a negative outlook.

“The coronavirus pandemic and global energy market weakness continue to impact all manufacturing sectors for the second straight month. Among the six big industry sectors, Food, Beverage & Tobacco Products remains the strongest. Transportation Equipment and Fabricated Metal Products are the weakest of the big six sectors,” says Fiore.

Of the 18 manufacturing industries, the two that reported growth in April are: Paper Products; and Food, Beverage & Tobacco Products. The 15 industries reporting contraction in April, in order, are: Printing & Related Support Activities; Furniture & Related Products; Transportation Equipment; Textile Mills; Fabricated Metal Products; Nonmetallic Mineral Products; Machinery; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Wood Products; Miscellaneous Manufacturing; Computer & Electronic Products; Primary Metals; and Chemical Products.


  • “Thirty percent decrease for April due to COVID-19 impact on both customers and suppliers.” (Computer & Electronic Products)
  • “Production stopped, other than to make hand sanitizer for those in need.” (Chemical Products)
  • “COVID-19 has created a wave of activities, including vendors closing, vendors focusing only on the medical industry, employees not coming to work, delayed shipments from overseas, [and] etcetera.” (Transportation Equipment)
  • “The food processing B2B space remains steady. We are weathering the storm. There is a fortunate increased need for packaged foods. Softening is showing through in some products that find their way into food service and lodging.” (Food, Beverage & Tobacco Products)
  • “Our refinery is losing money making gasoline due to the falling demand.” (Petroleum & Coal Products)
  • “We supply the construction industry in various ways, where the slowdown has been a bit slower than most industries. It is, however; beginning to impact our business, and we see more challenges on the horizon.” (Fabricated Metal Products)
  • “The company I work for manufactures personal protective equipment [PPE], specifically N95 masks, face shields, as well as selling protective clothing and hand protection. In the area of PPE, our backlog has spiked to numbers we have never seen. While no doubt some of the backorders will be canceled, many of the orders are longer term commitments from [the] U.S. government.” (Apparel, Leather & Allied Products)
  • “Our packaging business is starting to see signs of a slowdown in May after two strong months into COVID-19.” (Paper Products)
  • “COVID-19 has destroyed our market and our company. Without a full recovery very soon, and some assistance, I fear for our ability to continue operations.” (Nonmetallic Mineral Products)
  • “Dealing with the effects of coronavirus and having 65% of our operations down.” (Furniture & Related Products)

April 2020








DirectionRate of
New Orders27.142.2-15.1ContractingFaster3
Supplier Deliveries76.065.0+11.0SlowingFaster6
Customers’ Inventories48.843.4+5.4Too LowSlower43
Backlog of Orders37.845.9-8.1ContractingFaster2
New Export Orders35.346.6-11.3ContractingFaster2
OVERALL ECONOMYContractingFrom Growing1
Manufacturing SectorContractingFaster2

Manufacturing ISM Report On Business data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.

Leave a comment

View Latest Digital Edition

Terry Mulreany
Subscriptions: 800 708 9373 x130
Susie Angelucci
Advertising: 484.459.3016

View Latest Digital Edition

Visit our sister website for news, information, exclusive articles,
deal tables and more on the asset-based lending, factoring,
and restructuring industries.