The economy rebounded in April, growing much faster than the languid pace of March due to a sharp rise in exports, according to a report released by the National Association of Purchasing Management.
The April Purchasing Managers' Index rose to 53 percent from 50.4 percent in March. It was the 33rd month running that the index has been over 50 percent, the dividing line at which the economy is growing or contracting."The economy entered the second quarter on a higher note than it ended the first quarter," said Robert Bretz, chairman of the NAPM's Business Survey Committee.
Bretz said a "surprising increase" in new export orders appeared to have fueled the brisk rebound from March's sharply lower growth. "Nevertheless, most other indicators signal a moderate rate of growth in the economy in the months ahead," said Bretz, who is also director of materials management at Pitney Bowes Inc.
New export orders increased at their highest rate since December after posting three consecutive months of lower growth rates. Of the 67 percent of NAPM members who export, 28 percent reported better export orders, up sharply from 22 percent in both February and March.
The four percent reporting worse export orders was down from nine percent in March.
The NAPM's Report on Business is based on monthly replies to questions asked of purchasing managers in over 250 industrial companies. The index is based on five indicators: new orders, production, vendor deliveries, inventories and employment.
The Purchasing Managers' Index averaged 52.4 percent in the first four months of 1989. If that average were to continue for the rest of 1989, it would mean total economic growth of about 2.5 percent, or about the same as in the first quarter, the NAPM said.
Both production and new orders posted increases after registering lower rates of growth in March. Inventory buying did not fuel the gains since that fell for the fourth month in a row, the NAPM said.
Employment fell for the third consecutive month. The Employment index was 49.2 percent, versus 49.4 percent in March. That was the lowest in a year, reflecting the caution with which managers view the slowing economy, the NAPM said.
Vendor deliveries slowed for the 31st straight month, and the rate of slowing was greater than in March.
More commodities were in short supply during the month. These included palladium, copper, nickel, steel and acrylic acid, used in manufacturing plastics.
Other items which have been in short supply for many months included caustic soda/soda ash, for paper-making and petroleum refining; titanium dioxide, a whitener for coatings and paints; and bleached paperboard for packaging.