US chemicals, plastics aid in strong April manufacturing gain

03 May 2010 20:31  [Source: ICIS news]

WASHINGTON (ICIS news)--The US chemicals and plastics industries were part of a strong manufacturing sector expansion during April, the Institute for Supply Management (ISM) said on Monday, helping boost the nation’s production growth rate to a six-year high.

The institute said that its closely watched purchasing managers’ index (PMI) rose to 60.4% last month, the highest rate of manufacturing expansion recorded since June 2004.

The PMI combines data in ten business performance measures for 18 different manufacturing industries in the US. An index reading above 50% indicates that the manufacturing sector is generally expanding, while an index below 50% means that production is contracting.

The April gain in the index marked the ninth consecutive month of expansion for the broad US manufacturing sector, the institute noted.

Norbert Ore, chairman of the institute’s business survey committee, said that data from last month show that “manufacturers continue to see extraordinary strength in new orders” and that “the signs for employment in the sector continue to improve”.

“Overall, the recovery in manufacturing continues quite strong, and the signs are positive for continued growth,” said Ore.

Chemical manufacturing and plastics production were among 17 of the 18 tracked industries to report expansion in April, the institute noted. Previously, while chemicals have shown manufacturing growth, the plastics sector was still in contraction.

Other manufacturing sectors covered by the ISM survey - such as fabricated metal parts, appliances, transportation equipment, computers and furniture - are key downstream consumers of chemicals and plastics, so expansion in those industries bodes well for further growth in chemistry-related products.

For the first time in several years, not a single manufacturing sector among the 18 monitored by ISM reported contraction during the survey month.

David Huether, chief economist at the National Association of Manufacturers (NAM), said the institute’s PMI measure for April shows that “improvement was broad-based across all manufacturing industries with increases in production, new orders and employment”.

“The fact that no manufacturing industry reported a contraction last month was a welcome surprise,” Huether said.

However, Huether noted that recent gains in US manufacturing growth in large part were due to resurgent export trade and that the rest of the nation’s economy is not necessarily keeping pace.

“While manufacturers are leading the economic expansion, the challenge will be to sustain those advances and build a recovery capable of driving down the jobless rate,” Huether said.

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