The U.S. manufacturing industry expanded for the ninth consecutive month in April, growing at the fastest pace in nearly six years and pointing to a broadening economic recovery for the sector.

Accelerating growth across a range of key indicators in April increased the momentum of the manufacturing sector’s recovery and positioned it at the forefront of the broader stabilization of the United States economy. Thanks to an upswing in new orders, production and improvements in the employment market, manufacturing is bolstering the health of the overall industrial sector.

According to the Institute for Supply Management’s (ISM) latest manufacturing Report on Business, released Monday, the U.S. manufacturing industry grew for the ninth month in a row in April, expanding at the fastest rate since June 2004. This was in line with the general U.S. economy, which grew for the 12th consecutive month.

The ISM report’s purchasing managers’ index (PMI), an important monthly indicator for the factory sector, rose from 59.6 in March to 60.4 in April, with index readings over 50 reflecting growth. The 0.8 percentage-point gain in the PMI shows that manufacturing is expanding at an increasingly faster rate. April’s PMI was the peak for the preceding year, significantly above the 12-month average of 53.5.

Additionally, ISM’s new orders index increased by 4.2 points in April, production gained 5.8 points, prices rose 3 points and the employment index grew by 3.4 points. Manufacturers’ inventories fell 5.9 points and the exports index declined 0.5 points.

“Manufacturers continue to see extraordinary strength in new orders, as the New Orders Index has averaged 61.6 percent for the past 10 months. The signs for employment in the sector continue to improve as the Employment Index registered its fifth consecutive month of growth,” Norbert J. Ore, chair of ISM’s Manufacturing Business Survey Committee, said. “Overall, the recovery in manufacturing continues quite strong, and the signs are positive for continued growth.”

According to the ISM report, 17 of the 18 manufacturing industries recorded growth last month: apparel; nonmetallic mineral products; wood products; petroleum and coal products; plastics and rubber products; fabricated metal products; electrical equipment; miscellaneous manufacturing; transportation equipment; machinery; computer and electronic products; primary metals; furniture; chemical products; printing; paper products; and food products. No industries reported declines in April.

Experts attribute much of the month’s expansion to a rise in new orders for manufacturing products and services, which improves the prospects for future demand in the sector.

“The demand stimulus for the factory sector revival is unequivocal with new orders accelerating and the new orders index climbing to a torrid 65.7, capping 10 consecutive months of growth,” Cliff Waldman, an economist for the Manufacturers Alliance/MAPI, explains in an analysis of the April report. “The durability and stability of the expansion does remain an issue, however, as the renewal of contraction in manufacturing inventories suggests a continued adjustment to a post-crisis environment.”

Inventory adjustments remain a subject of concern from the manufacturer and consumer sides alike, especially as stock levels realign to pre-recessionary levels.

“Manufacturers have ramped up production because customers’ inventories were so low. As inventories return to historically normal levels, production may slip lower without more demand from consumers,” the Associated Press reports. “That may discourage employers from adding back many of the full-time jobs they cut during the recession.”

Despite these lingering worries, the outlook among manufacturers is gradually improving. According to the latest quarterly manufacturing barometer survey from PricewaterhouseCoopers, released last week, 53 percent of industrial manufacturers are optimistic about the U.S. economy’s prospects over the next 12 months. Only 10 percent are pessimistic, down significantly from 55 percent a year ago.

Looking ahead, 75 percent of respondents expect to see positive revenue growth for their companies over the coming year, up from 57 percent who had the same expectation the previous quarter. Seventy percent of manufacturers plan to increase operational spending over the next 12 months, 28 percent plan to make major new capital investments and 27 percent plan to add to their workforces.

“While confidence among industrial manufacturers remains somewhat guarded, economic indicators confirm the outlook for the industry is gradually growing more positive,” Barry Misthal, U.S. industrial manufacturing leader for PricewaterhouseCoopers, said in a statement. “Many companies are projecting positive growth throughout the year, however, increased concerns over legislative and regulatory pressures may inhibit the rate of growth in the short term.”

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Resources

April 2010 Manufacturing ISM Report on Business
Institute for Supply Management, May 3, 2010

MAPI Analysis on ISM Report: Manufacturing Recovery ‘Strengthening and Broadening’
by Cliff Waldman
Manufacturers Alliance/MAPI, May 3, 2010

Ahead of the Bell: ISM Manufacturing Index
The Associated Press, May 3, 2010

Manufacturing Barometer Business Outlook Report: First Quarter 2010
PricewaterhouseCoopers, April 27, 2010

Outlook Slowly Brightens on U.S. and Global Economies Among U.S. Industrial Manufacturers…
PricewaterhouseCoopers, April 27, 2010