U.S. manufacturing in April strengthened for the first time in nine months but the growth was extremely slow, a widely followed survey of U.S. purchasing executives report.
The National Association of Purchasing Management's index, based on survey results, provided fresh evidence of economic strength in April. But the managers who purchase raw materials for U.S. factories had some concerns about consumer demand for finished products.The recovery is "very tentative," said Ralph Kauffman, chairman of the NAPM's survey committee. It remains to be seen whether the manufacturing economy can sustain its growth in May and not start shrinking again, he said.
The purchasing managers' survey also showed that the overall economy continued to grow in April for a third straight month.
The news spurred a modest recovery in stocks and bonds, which had opened lower amid some expectations that U.S. manufacturing growth could aggravate inflation.
Cheering investors was the finding that inflation pressures remained under control in April despite the increased factory activity. Prices paid by manufacturers for raw materials dropped for a ninth straight month, though at a slower rate than March.
Such signs of tame inflation spell relief for investors in government bonds and other fixed-rate investments, which tend to lose value when prices rise in the economy.
The survey's overall manufacturing index improved to 50.1 percent in April from 46.9 percent in March, the first time since July 1995 that the index has risen above 50 percent. Because any reading below 50 percent shows weakness, the new figures show a minor rebound from a prolonged slump.
Spurring the recovery was increased factory production and demand for new orders. However, other manufacturing aspects remained weak, with drops in backlogs for orders, inventories of materials and employment.
"Purchasing executives' comments in April on current business conditions revealed guarded optimism for the near future, but expressed concern for lack of strength in consumer demand," Kauffman said.
The industries showing the most strength last month included furniture, glass, wood, tobacco metals, textiles and chemicals.