The ISM index fell to 55.4%, against 57.1% in March, a surprise drop since analysts had expected a slight increase to 57.9%.
The growth of the manufacturing sector in the United States slowed further in April, due to persistent labor shortages, according to the index of the professional federation ISM published on Monday.
The index now stands at 55.4%, compared to 57.1% in March, a surprise drop since analysts were expecting a slight increase to 57.9%. It is now at its lowest level since July 2020.
The activity is growing when the index is above 50%. It contracts when it is lower than this limit.
The head of this investigation, Timothy Fiore, pointed out in a press release that the resolution of the problems of labor shortages has stagnated last month “at all levels of the supply chain”.
Respondents also reported higher quit rates compared to previous months.
Most of the components of the index are thus down, with the exception of the level of deliveries and inventories.
The employment component thus lost 5.4 percentage points to 50.9%, that measuring new orders 0.3 point to 53.5%, production lost 0.9 point to 53.6% and the component measuring the level of order books fell 4 points to 52.7%.
Among the main problems encountered last month, companies in the chemical industry cited the closing of factories by their suppliers in Shanghai.
They also noted the long delays at ports, including in the United States, which “still pose supply problems”.
Some of them also felt that inflation was “out of control”, with additional fuel costs, and therefore additional freight costs. According to them, “it will be difficult to have real growth with such pressure on costs”.
But they also note that, despite the problems and poor outlook, business remains buoyant.
In the transportation equipment sector, respondents assured that strong demand continues and noted slow improvements in supply.
Finally, in the food and beverage sector, companies note that “the supply chain is still limited and prices continue to rise”. Officials are working “to stay profitable while continuing to fill customer orders.”