U.S.: The manufacturing sector slows down - TD Bank Financial Group

According to ActionForex, analysts at TD Bank Financial Group discuss the April decline in the U.S. ISM manufacturing index.

"The April ISM manufacturing index dropped to 60.7, well below market expectations for 65. This marked a 4.0 percentage points decrease from the March reading of 64.7."

"The overall economy registered the eleventh consecutive month of growth. After last month’s biggest jump since the pandemic’s onset, manufacturing activity has cooled. The slowdown in activity was broad-based with production, employment and imports registering the biggest declines compared to March. Meanwhile, the jump in backlog of orders continues to show supply struggling to catch up with demand."

"The manufacturing sector’s expansion continues, albeit at a slower rate. Companies and suppliers are struggling to meet the rising demand due to pandemic-related restrictions and limited availability of manufacturing inputs. These shortages, along with rising commodity prices and difficulty in transporting goods are impacting all segments of the manufacturing sector. Meanwhile, the labor market is still weak and businesses are continuing to hold back on investment amidst still-elevated uncertainty. The recent slowdown in vaccine administration isn’t likely to help either as it would delay reopenings in certain states. Moreover, the sector continues to remain vulnerable to another wave of cases and new variants."