U.S. manufacturing expands at fastest pace in 10 months in April

May 1, 2012

Manufacturing in the U.S. grew in April at the fastest pace in roughly a year, as new orders, production and a measure of employment all ticked upward for the month, The Associated Press reported.

According to the news outlet, the Institute for Supply Management index for manufacturing activity in the U.S. rose to 54.8 for April. This marks the highest level for the indicator since June 2011 and an increase of 1.4 from the previous month. Readings above 50 indicate expansion within the sector.

A measure of employment within the sector rose to a nine-month high, indicating that factories in the U.S. are increasing hiring. This report came as a shock to many in the industry, as experts had seen negative data from the past several months as a sign that manufacturing was slowing down.

CNN Money reported that economists had expected the index to drop to 53, which would have affected the business strategy and sentiment for many companies in the sector. This prediction came due to the stagnation of the global economy, with countries like Spain entering into a recession.

Despite the global setback, U.S. manufacturing expanded in all major areas.

Bloomberg News reported that the employment gauge climbed to 57.3 from 56.1 in March. The index for prices paid in the sector held steady at 61 and the measure of orders waiting to be filled decreased.

According to the news outlet, the gauge of customer stockpiles increased to 45.5 from a three-month low and future demand sentiment for manufacturers also rose.

In the U.S., "the manufacturing side of the economy is holding up well, and you’re going to continue to see that," Steve Ricchiuto, chief economist at Mizuho Securities USA Inc. in New York, told Bloomberg. "A huge portion of the strength is from autos, and production assembly plans are not being tempered."

Manufacturers noted significant gains were made in automotive and high-technology industries, and firms throughout the sector "expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices," the Federal Reserve said in a report.

Although gas prices are expected to rise in the summer months, manufacturers are optimistic that increased orders and steady demand will support the momentum that the sector currently has.