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ISM Manufacturing Index Indicates Modestly Slower Growth In April

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While the Institute for Supply Management released a report on Monday showing that U.S. manufacturing activity increased at a slower pace in April, the pace of growth slowed by less than economists had been anticipating.

The ISM said its index of manufacturing activity fell to 60.4 in April from 61.2 in March, although a reading above 50 indicates continued growth in the sector. Economists had been expecting the index to show a more significant decrease to a reading of 59.5.

Norbert J. Ore, CPSM, C.P.M., chair of the ISM Manufacturing Business Survey Committee, said, "The recent trend of rapid growth in the manufacturing sector continued in April as the PMI registered above 60 percent for the fourth consecutive month."

The report showed a notable slowdown in the pace of production growth, as the production index fell to 63.8 in April from 69.0 in March. The new orders index also fell to 61.7 from 63.3, indicating a modest slowdown in the pace of new orders growth.

The employment index also edged down to 62.7 in April from 63.0 in the previous month, although it still pointed to the nineteenth consecutive month of job growth in the manufacturing sector.

On the other hand, the prices paid index inched up to 85.5 in April from 85.0 in May, pointing to a modest acceleration in the pace of price growth.

"While the manufacturing sector is definitely performing above most expectations so far in 2011, manufacturers are experiencing significant cost pressures from commodities and other inputs," Ore said.

The ISM is due to release a separate report on Wednesday regarding activity in the service sector in the month of April. The index of activity in the sector is expected to slip to 57.0 in April from a reading of 57.3 in March.

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