US manufacturing back in contraction/Demand for workers lessening

The ISM manufacturing index slipped back below 50 in April at 49.2 vs 50.3 in March and vs the estimate of exactly 50. 

New orders dropped by 2.3 pts m/o/m to 49.1 while backlogs remain well below 50 at 45.4 vs 46.3 in the month before. No sign yet either of inventory build as this category held at 48.2 and customer inventories were 47.8, though up from 44 in the month before. In contrast to what ADP said, the employment component remained below 50 again at 48.6 with only 4 of 18 industries asked adding staff. Export orders fell back under 50 at 48.7 vs 51.6 in March. 

Specifically with inventories, ISM said "Panelists’ companies continue to indicate a willingness to invest in manufacturing inventory to improve on-time deliveries, gain precision in revenue projections and improve customer service. However, they are proceeding judiciously on this objective, preferring to wait for additional demand.”

Of note, prices paid jumped 5.1 pts to 60.9 and that is the highest since June 2022. Supplier deliveries fell 1 pt to 48.9 so no supply chain issues and the prices paid jump is most likely due to the rise in commodity prices. ISM said, "Commodity prices continue to increase, especially crude oil, aluminum, steel and plastics. Thirty-one percent of companies reported higher prices in April, compared to 24 percent in March.”

With respect to breadth, it was similar to March with 9 industries seeing growth and 7 experiencing a contraction (vs 6 in March).