Manufacturing recovery continues in April

The purchasing managers’ index (PMI) was 51.7 in April, unchanged from March but above the boom-or-bust line, the latest survey from S&P Global showed on Wednesday.

Growth was the softest in the current seven-month sequence of expansion, restrained by rising costs, according to respondents.

A reading above 50 indicates expansion in manufacturing from the previous month, while a value of below 50 represents a contraction.

“The rapid decline in Covid-19 cases in Vietnam helped lead to renewed growth of output and employment in April amid a return to more normal business conditions,” Andrew Harker, economics director at S&P Global, said.

“This provides hope that the sector can now see a sustained period of recovery and expansion.”

The survey also found that both output and employment returned to growth in April after having dropped in March, while businesses benefited from a decline in Covid-19 cases as employees returned to work.

There were also widespread reports of recruitment as job creation reached the fastest rate in a year.

Growth of new export orders also slowed, with Covid-19 restrictions in mainland China partly being the cause.

Softer new order growth and higher staffing levels meant firms were able to keep on top of workloads and reduce backlogs for the first time in three months.

Input costs continued to increase sharply, with the rate of inflation being the second fastest in 11 years as freight and fuel prices rose. Manufacturers increased prices at the fastest pace in five months.

Suppliers’ delivery times continued to lengthen as China’ Covid restrictions and the war in Ukraine affecting the ability of firms to secure inputs. But this was mitigated by the pandemic situation improving in Vietnam.

Supply issues contributed to a fall in raw material inventories declining for the first time in four months.