ISM manufacturing index came in at 51.5 in April, unchanged from its reading in March. The headline number was slightly below expectations, with markets calling for a 52.0 print. Despite, the flat headline reading, details of the report were quite positive. Production rose for the first time in five months, gaining 2.2 points. Exports and imports sub-components also reversed their slump, gaining 4.0 and 1.5 points respectively.Even more encouraging was the gain in new orders and widening in the new orders-inventories spread, which increases the likelihood that the uptick in production will be maintained. There are also signs that some of the headwinds that hindered factory activity in the prior months are beginning to ease.Additionally, oil prices have regained some ground since the slump, supporting industries linked to the oil and gas sector. Taken together, these factors are conducive for improved manufacturing activity, which will likely show up in the numbers next month.“While there remains no definitive tell-tale sign that the U.S. economy is rebounding from the first quarter weakness, momentum is building up. Despite recent gains, oil prices are still at the levels which are favorable to U.S. consumers. Led by stronger domestic demand, the economy will begin to show more gusto in the months ahead.” says TD Economics
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