Implications: Don't fret the headline decline. The manufacturing sector continued to grow in April, although at a slightly slower pace than in March, and the underlying details point to continued growth in the months ahead. The two most forward looking measures, new orders and production, slowed in April, but remain comfortably above 50, signaling expansion. And growth isn't limited to a few select industries. Fifteen of eighteen industries reported growth in new orders, while just one, textile mills, reported declines. Production tells a similar tale, with fifteen of eighteen industries reporting growth while two, textile mills and petroleum & coal products, reported declines. Unfortunately, recent growth in manufacturing hasn't been reflected in rising employment in that sector. Manufacturing employment declined by 29,000 in March and we are forecasting an additional decline in April. But manufacturing represents just a small portion of total employment and productivity is growing. Meanwhile, total employment continues to expand at a healthy 200,000+ jobs per month clip. On the inflation front, the prices paid index jumped 7.5 points to 59.0 after a 13 point surge in March. Rising energy and metal prices led twelve of eighteen industries to report higher input costs. As a whole, today's data show manufacturing activity moving in the right direction. It isn't booming, but it should continue to plow forward at a modest pace. In other news this morning, construction increased 0.3% in March, but declined 0.6% including revisions to prior months. The gain in March itself was primarily due to home building, led by apartments and improvements to existing homes, which offset a drop in government projects, including passenger terminals, power plants, and sewage & waste facilities.
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