U.S. manufacturing expanded for the fourth consecutive month in April, according to a widely watched index that showed robust exports and an uptick in inventories.
The Institute for Supply Management’s manufacturing index registered 60.4 last month, down from 61.2 in March but the fourth consecutive reading above 60. Readings greater than 50 signal expansion.
“A lot of this growth in manufacturing is driven by export demand and the weaker dollar,” said Norbert Ore, chairman of the ISM survey. He said the ISM figures appear unaffected by supply chain disruptions from the Japan earthquake and tsunami, although automakers had “to make some changes.”
The survey’s exports index jumped to 62 from 56 in March. The inventory index rose to 53.6 from 47.4. ISM’s gauge of supplier deliveries slipped to 60.2 from 63.1. The index measuring unfilled orders rose to 61, matching an almost six-year high reached in February 2010.
“The slower orders growth seems domestically driven since export orders, accelerated robust foreign growth and a weak dollar are spurring exports,” Nigel Gault, chief U.S. economist at IHS Global Insight, said in a commentary.
Gault said the increase in inventories is “not a bad thing because inventories are at low levels relative to sales. There was little evidence of disruption from the Japanese earthquake and tsunami. Supplier deliveries did slow, but less severely than in March.”
Gault said the immediate outlook for manufacturing “remains strong. Cost pressures are the cloud over the expansion, squeezing profit margins, and prompting ‘buy-ahead’ behavior as companies try to get inventory in ahead of price increases. But they are not yet so severe as to derail the expansion.”
The survey’s index of prices paid rose to 85.5 from 85 in March.