ISM Manufacturing Index Slides to 54.8 in April -- Update

By Jeffrey Sparshott Features Dow Jones Newswires

U.S. factory activity decelerated in April, a sign of healthy but somewhat slower growth for the manufacturing sector.

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The Institute for Supply Management on Monday said its closely watched index of U.S. manufacturing activity fell to 54.8 in April from 57.2 in March. A number above 50 indicates expansion.

Economists surveyed by The Wall Street Journal had expected a April reading of 56.5.

"There are going to be some ups and downs and certainly we can't keep seeing these things going up up up or we'd bump our heads against the ceiling and get overheated," said Bradley Holcomb, who oversees the survey.

Mr. Holcomb noted that ISM manufacturing readings for each month this year have been higher than any month in 2015 or 2016.

Still, the ISM sub indexes for new orders and employment both fell sharply, possible signs of waning momentum in the sector.

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The new orders index fell 7 percentage points to 57.5 and employment sank 6.9 points to 52.

U.S. factory activity was stagnant through long stretches of 2015 and 2016 while the energy sector slumped and a strong dollar made American goods more expensive overseas.

More recently, stabilizing commodity prices and improving global demand have supported the sector. Factory output increased at an annual rate of 2.7% in the first quarter, the Federal Reserve said last month in a separate report.

The broader economy, however, has sent mixed signals in recent months. The labor market slowed in March and gross domestic product, a broad measure of economic output, was tepid in the first quarter.

Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com

(END) Dow Jones Newswires

May 01, 2017 10:52 ET (14:52 GMT)