Buyers Report Mixed Picture for Economy

After slowing for two months, the economy turned mixed in April, the National Assn. of Purchasing Management said Sunday.

The purchasing managers’ group said new orders--a leading indicator of future production--rose in the latest monthly survey to their highest level since June. In addition, production maintained the healthy pace of March, the group said.

In contrast, inventory and employment showed no change from their low levels in March, the group said.

A lingering negative sign is that the purchasing managers’ composite index fell in April for the third consecutive month, it said.

Also confirming the economy’s lack of strength were an improvement in vendor deliveries, no items being in short supply and the apparent inability of companies to increase prices, it added.

“The April improvement in new orders is noteworthy but it is overshadowed by a major concern, namely, the continued decline in the purchasing managers’ composite index,” said Robert J. Bretz, director of corporate purchasing for Pitney Bowes Inc. and chairman of the group’s business survey committee.

Thirty-two percent of the group’s members reported that new orders were better in April, compared to 26% the previous month.

The seasonally adjusted composite index fell to 47.3% in April from 47.7% in March. That was the lowest level since January, 1983, when the index fell to 46.9%.

A reading below 50% indicates that the economy is in a declining phase, above 50% indicates that the economy is expanding, the group says.

Thirty percent of the members indicated production was higher in April, up from 27% in March and the highest since June, when 35% did.

However, the increase was offset somewhat by the 17% reporting worse production, compared to 14% in March.

The speed at which vendors delivered their products improved in April, with more than twice as many purchasers--13%--reporting faster than slower delivery. That indicates vendors have plenty of excess production capacity.

Also, twice the number of purchasing managers, 14%, reported paying lower prices in April than those who reported paying higher prices. That made April the fifth consecutive month that more purchasers reported lower prices than higher prices.

Numerous members reported the inability of their own company to raise prices, suggesting a squeeze on corporate profits in the months ahead, the group said.

The group’s report is based on data compiled from surveys of purchasing managers at 250 industrial companies.