-->By Michael S. Derby and Agnes Crane
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--U.S. manufacturing activity improved for the 11th straight month in April, as factory operators confronted their heaviest level of price pressures in almost a quarter of a century, a private research group said Monday.
The Institute for Supply Management reported that its index of manufacturing activity effectively held steady during April at a reading of 62.4, versus 62.5 in March. A reading above 50 points to expansion and describes the breadth of the change, but it doesn't measure the magnitude of the change in activity seen by individual survey respondents.
April's reading, which if maintained would correspond with a 7.1% increase in U.S. gross domestic product, matched what economists had expected. A survey of forecasters conducted by Dow Jones Newswires had predicted a reading of 62.5, repeating what was seen the month before.
"The second quarter is off to a very strong start," ISM survey director Norbert Ore said in a press release detailing the report's findings."Many respondents indicate that order backlogs are growing for the first time in several years. The list of metals up in price is quite extensive - almost every category of product has seen price movement," Ore added.
(MORE) Dow Jones Newswires
05-03-04 1020ET
=DJ DATA SNAP/ISM Mfg: Activity Up In April; Prices Surge-2-
Indeed, it was on the price front that manufacturers confronted their greatest challenge in April. The ISM reported that its prices index rose to 88.0 from 86.0 in March. April's prices index is at its highest level since November 1979.
The ISM noted in the report"concerns for availability of ferrous and non-ferrous metals," along with"escalating costs in a market that is still resistant to higher consumer prices."
Tough news on prices was, however, balanced with good news on almost every other front. The group said that its new orders index, which is seen as an indicator of future activity, ebbed modestly to a still-strong reading of 65.0 in April, from 65.7 the month before. The production index fared better, and stood at 67.0, versus 65.5 in March.
The ISM report continued to show that the nation's manufacturers are boosting their hiring. The employment index indicated continued growth at a level of 57.8 in April, the sixth straight monthly gain and the best reading since December 1987, from the 57.0 reported for the prior month.
In a conference call with reporters, Ore characterized the employment environment as"excellent" as manufacturers add workers, although they haven't fully replaced those lost since the recession of 2001.
Ore also said that there's no longer a sense that companies are delaying their hiring as they did before when the economic outlook was uncertain."When we look at the employment data, I think we finally have some good numbers coming out of it," he said.
The ISM also reported that manufacturers were still bleeding off their stocks at an accelerated rate. The inventories index for April was 44.8, after 48.3 in March.
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