The ISM® (Institute for Supply Management®) Manufacturing PMI® reported in at 47.1% for April, as business activity increased 0.8 percentage points from the previous month. A value below 50% is indicative of a shrinking economy. This marks the sixth consecutive month in contraction territory after 29 months of growth. “The U.S. manufacturing sector contracted again; however, the Manufacturing PMI® improved compared to the previous month, indicating slower contraction”, said Timothy Fiore, chairman of the ISM® Manufacturing Business Survey Committee. Of the six largest manufacturing industries, only petroleum & coal products and transportation equipment, recorded growth in April. The forward-looking new orders sub-index which has been in contraction territory for 8 consecutive months, increased 1.4 percentage points and improved to 45.7%. The Prices Index which measures what companies pay for raw materials and other supplies showed an uptick in inflation, jumping 4 percentage points to 53.2%. The index returned to expansion territory after one month of contraction. The Employment Index increased by 3.3 percentage points to 50.2% and followed two months of contraction. The Backlog of Orders Index declined 0.8 percentage points to 43.1% and has now contracted for the seventh consecutive month following 27 months of expansion.

The Federal Open Market Committee (FOMC) announced the raising of its benchmark federal funds rate by 25 basis points, putting it in the range of between 5.00% and 5.25% — the highest level since October 2007. Fed policymakers voted unanimously to raise their benchmark interest rate. The move marked the tenth increase since March 2022 and follows 25-basis point increases in February and March, a 50-basis point increase in December, and four consecutive FOMC meetings ending with a 75-basis point climb. The FOMC statement stated “The Committee will closely monitor incoming information and assess the implications for monetary policy. In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time”. The statement’s wording shows a further softening in the FOMC’s stance, hinting at a possible pause. March’s statement indicated - “The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time “.

The U.S. Bureau of Labor Statistics reported 253,000 jobs were added as the unemployment rate dropped slightly to 3.4% in April from 3.5% the previous month. February and March’s employment readings were revised downward, for a combined (-149,000) less jobs. The number of unemployed workers dropped slightly to 5.7 million. Professional and business services added (+43,000) jobs, followed by health care (+40,000), leisure and hospitality (+31,000), social assistance (+25,000), financial activities (+23,000), and government (+23,000). Employment was little changed in other major industries, including construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, and other services. The number of people jobless for less than 5 weeks dropped (-406,000) to 1.9 million. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.2 million, accounting for 20.6% of the total unemployed. The labor force participation rate held steady at to 62.6%, leaving it still below the pre-pandemic level of 63.4%. Average hourly earnings increased by 0.5% in April. At $33.36 average hourly earnings are up 4.4% from a year ago.