Slowing expansion in April: manufacturing industry downgraded

Gradual slowdown in growth

The manufacturing sector has been showing a gradual slowdown since last summer, which was only broken by the data for November and December with some recovery. The sector has also been characterized by subdued dynamics in the first month of this spring, as is clearly demonstrated by the fact that the April BMI is the eighth lowest monthly value since the index was introduced in 1995.

Mixed picture in individual indicators

Most of the sub-indices showed a decrease, with three indicators – including production volume – falling into contraction territory. The production volume index fell by 2.5 percentage points, now indicating one of the lowest April values ​​in 30 years. The new orders index stagnated, but its value still indicates a slight increase.

The employment index rose positively, standing at 52.1 points – the largest monthly increase among the indicators examined. The purchased inventories and delivery lead time indices increased slightly, but the latter remained below 50 points, indicating a slowdown in deliveries.

Price increases and shortages in the raw material market

The purchase price index, despite a decrease of 6.7 percentage points, still indicates a price increase, but at a more moderate pace. Respondents to the survey reported price increases for, for example, aluminum, nickel, paper, polyester and brass, while significant price decreases were reported for, among others, electronics, cooking oil, wood, rare earth metals and eggs. There was a shortage of leather and LED bulbs.

Foreign market indicators: moderate differences

The foreign trade sub-indices developed mixedly: the import index closed above 50 points, while the export index closed below it. The weakness in exports is somewhat contrary to the trend of previous months, when a mostly parallel movement could be observed.

What is behind the numbers?

The current BMI indicator is a clear sign that the domestic manufacturing industry – although technically still expanding – has lost significant momentum. At the same time, the value of the index above 50 points indicates that there is no talk of a recession, but the signs of a slowdown are becoming increasingly clear. Market participants have become more cautious, and the volatile global environment and unpredictable cost developments are also having a strong impact on the operations of domestic companies.

Background to the survey

The BMI index published by MLBKT is compiled by monthly surveying purchasing managers of 100 manufacturing companies, based on the methodology of the American Institute for Supply Management. The composite index, made up of five sub-indices, is one of the most important economic indicators of domestic industry, and is the first to indicate changes in market sentiment.