April 2018 Institute for Supply Management

Output continued advancing on both sides of the economy in April 2018 according to the Institute for Supply Management.  While both components slowed, their readings remained robust.  Manufacturing’s tally was 57.3, down two points versus March.  Likewise, non-manufacturing gave up two points, falling to 56.8.  Despite these setbacks, America’s economy is strong. 

Evidence suggests manufacturing will add to its current streak of upticks (currently 20 months).  At 61.2, new orders indicate firms will have plenty of work to do in the months ahead.  Deliveries received had an elevated reading as well (delays hit 61.1), meaning wholesale businesses are challenged to meet demands; this could lead to additional hiring or capital investments to fill orders faster.  The Price Index rose to its highest level since April 2011 as material costs increased in 17 out of the 18 sectors surveyed.

The ISM’s non-manufacturing reading put in its 99^th consecutive month of growth in April.  Business activity remained robust with its tally of 59.1, and not a single industry reported decreased activity.  Looking ahead, new orders edged higher to 60.0, so there should be plenty of output during the next several months.  According to the ISM’s calculations, the services portion of the economy grew by roughly 2.9 percent on an annualized basis. 

There is no beating around the bush, America’s economy continued advancing as the second quarter got underway.  There is virtually nothing in these releases to suggest a need for concern regarding the end of the current virtuous portion of this business cycle.  Atlas is hardly a Pollyannaish group, but even we cannot find a reason for concern.