Although it was unchanged at 51.5 in April, the ISM manufacturing index is still at a level consistent with GDP growth of nearly 2% annualised. Given the extent of the dollar’s appreciation over the past 12 months, the export-orientated manufacturing sector will continue to struggle for some time yet. U.S. manufacturing is now a relatively small part of the economy and, with the ISM non-manufacturing survey pointing to GDP growth of more than 3%, the muted level of the ISM manufacturing index is not necessarily a worrying sign. Note that both the exports and imports indices rebounded sharply in April, which is probably a delayed reaction to the end of the West Coast port dispute in February.
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