Heavy Duty Trucking Logo
MenuMENU
SearchSEARCH

Economic Watch: Manufacturing Remains Weak, Construction Strong

Two new readings of the U.S. manufacturing sector for April show the second quarter began with a slowdown in production and new business growth, while a separate report indicates construction activity is booming.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
May 2, 2016
Economic Watch: Manufacturing Remains Weak, Construction Strong

 

3 min to read


Two new readings of the U.S. manufacturing sector for April show the second quarter has begun with a slowdown in production and new business growth, while a separate report indicates construction activity is booming.

According to Institute for Supply Management’s monthly survey of purchasing and supply executives, manufacturing activity barely expanded during April. Its Purchasing Managers Index registered 50.8%, down a full percentage point from the month before. The number indicates growth in manufacturing for the second consecutive month, following five consecutive months of contraction in manufacturing.

Ad Loading...

A reading above 50% indicates expansion while one below 50% shows it’s contracting. This latest is weaker than a consensus expectation from a survey of economists made by MarketWatch.

The New Orders Index registered 55.8%, a decrease of 2.5 percentage points from the March reading. The Production Index registered 54.2%, 1.1 percentage points lower than the March figure.

While technically the second month of expansion, this sizable decline in manufacturing activity back down towards breakeven suggests a short-lived reprieve for producers, according to Lindsey Piegza, chief economist at Stifel Fixed Income, part of Stifel Nicolaus.

Ad Loading...

“Despite more favorable conditions as of late, including a reduced inventory overhang as well as a decline in the value of the U.S. dollar, production weakness appears to be carrying forward into the second quarter,” she said. “Federal Reserve officials remain optimistic for a near-term pickup in activity, needed improvement to justify a June [interest]rate hike following a weaker-than-expected first-quarter GDP report. However, lingering themes of lackluster activity could easily undermine growth beyond the first three months of the year, a scenario that would make it difficult for the Fed to raise rates in June or at all in 2016."

Meantime, a similar gauge, the final U.S. Manufacturing Purchasing Managers’ Index from the financial information services provider Markit, registered 50.8 in April. That's unchanged from its preliminary reading but down from 51.5 in March and only slightly above the 50 no-change threshold.

The latest reading was weaker than the average seen in the first quarter and shows the slowest improvement in overall business conditions in that past six and a half years, according to Markit.

Manufacturers recorded another modest increase in overall new work at the start of the second quarter, but the rate of expansion was the weakest since December 2015. Reduced export demand had a negative influence on manufacturing order books in April, with new work from abroad decreasing at the fastest pace for nearly one and a half years.

“The April PMI data suggest there’s no end in sight to the current downturn in manufacturing activity,” said Chris Williamson, chief economist at Markit. “The survey indicates that factory output is dropping at an annualized rate of approximately 3%, and factory headcounts are being culled at a rate of around 10,000 per month."

Ad Loading...

According to Williamson, rather than reviving after a disappointingly weak first quarter, conditions appear to be worsening in the second quarter, raising questions over whether gross domestic product growth will improve from the near stalling seen in the first three months of the year.

Construction Remains Bright Spot

A separate report on the construction business from the U.S. Commerce Department on Monday shows construction spending in March increased 0.3% from the month before to an annual rate of %1.137 trillion, its highest level since October 2007.

The increase was slightly less than a panel of economists were expecting. February’s performance was revised higher and January’s was changed to show a small drop rather than an originally reported gain.

Construction spending posted an even bigger 8% jump in March from the same time in 2015. During the first three months of this year, construction spending amounted to $240.4 billion, 9.1% higher than the level for the same period in 2015.

Pushing the overall March performance higher was a 1.1% surge in private construction, hitting its best level since October 2007, while spending on private nonresidential building also advanced to its best pace since October 2008. Public construction fell 1.9% as local, state and federal outlays declined.

More Fleet Management

Red Kodiak-branded autonomous tractor with Charger-branded trailer backed up to warehouse
Fleet Management•October 30, 2026

Kodiak Lines Up Fleets for Driverless Trucking

An agreement for 75 trucks, a new Texas freight lane, and progress on safety validation move Kodiak closer to its planned driverless highway launch.

Read More →
Illustration with Star of David and EEOC logo
Fleet Management•by News/Media Release•October 28, 2026

ITS Logistics Settles Religious Harassment Case

The Nevada-based logistics firm agreed to pay more than $396,000 to settle a religious harassment charge involving an employee's Jewish identity.

Read More →
Truck on divided interstate highway driving toward sunrise
Fleet Management•October 27, 2026

Your Trucks Are Busy. That Doesn’t Mean They’re Winning.

High utilization doesn’t always mean strong margins. Looking beyond the current load can help fleets make better dispatch decisions and get more value from each truck’s time.

Read More →
Ad Loading...
ATA economist Bob Costello speaking beside a graph showing truckload operating costs rising as freight revenue per mile declined after 2022.
Fleet Management•by Deborah Lockridge•October 22, 2026

Why This Trucking Recovery Is Different

Freight demand remains sluggish, but rising costs and tougher enforcement have taken enough capacity out of the market to change the outlook for motor carriers.

Read More →
PS Coach tablet interface showing a driver’s coaching inbox, safety event video and coaching advice for a harsh-braking event.
Fleet Management•by News/Media Release•October 21, 2026

Platform Science Adds Dispatch and Safety Tools

Four additions to PS Fleet help fleets monitor loads, manage driver coaching, share truck locations and adjust video system settings.

Read More →
Screen capture showing PrePass Intelligence data on tolls
Fleet Management•by News/Media Release•October 21, 2026

PrePass Intelligence Mines Fleet Bypass, Toll and Safety Data

PrePass Intelligence helps fleets measure bypass savings, flag potential toll overcharges, and spot suspicious transactions by combining data from separate systems.

Read More →
Ad Loading...
Computer screen showing examples of what fleets could ask Motive AI Agents to do
Fleet Management•by Staff•October 20, 2026

Motive Adds AI Agents for Fleet Operations

New tools automate follow-up on fleet data, from maintenance work orders to driver alerts, with two-way voice conversations planned for later this year.

Read More →
Graphic art with a heavy-duty tractor trailer and a work truck with the words "trivia lunch"
Fleet Management•by Lauren Fletcher•October 19, 2026

Can You Beat Our Trucking Trivia Challenge?

Test your truck knowledge with 19 trivia questions from Heavy Duty Trucking Exchange. Can you keep up with the fleet pros?

Read More →
Four horizontal and two vertical video screens show different aspects of BeyondTruck's new compatibility engine
Fleet Management•by Deborah Lockridge•October 19, 2026

BeyondTrucks Adds Rules Checks to Dispatch

New Compatibility Engine checks driver qualifications, equipment requirements and fleet policies before loads are dispatched.

Read More →
Ad Loading...
Gloved hand fueling a truck beside a graphic listing ATRI’s top three trucking concerns for 2026: fuel prices, lawsuit abuse reform and CSA.
Fleet Management•by Deborah Lockridge•October 19, 2026

Diesel Prices Hijack Trucking’s Worry List

ATRI’s annual survey finds cautious optimism about freight, but diesel costs, litigation, and insurance continue to squeeze fleets. Drivers have different priorities on several issues.

Read More →