US manufacturing sees moderate growth in April as China trade talks continue

Growth in the US manufacturing sector picked up slightly in April, with output and new orders bouncing back from the lows seen in March, according to a closely-watched industry gauge.

Read more: US stocks rise as 'productive' China trade talk round ends

Despite companies’ backlogs growing, the rate of job creation was the slowest since June 2017 due to a shortage of workers, according to survey data compiled by statistics company IHS Markit.

The firm's manufacturing purchasing managers’ index (PMI), which indicates the health of the sector, rose to 52.6 in April, up from March's score of 52.4. A score of above 50 indicates an improvement.

Chris Williamson, Chief Business Economist at IHS Markit said: “Although the PMI ticked higher in April, the survey remains consistent with manufacturing acting as a drag on the economy at the start of the second quarter”.

The modest growth was held back by orders from abroad remaining subdued thanks to global trade tensions and slowing foreign demand.

The mixed news came after the US and China wrapped up the latest round of trade talks that seek to limit the damage that tariffs are doing to exporters in each country.

Treasury secretary Steven Mnuchin today called the talks “productive”. Vice Premier of China, Liu He, is due to fly to Washington next week to attend a further, and possibly final, round of discussions.

Today’s IHS Markit survey showed US manufacturing managers remained relatively unenthusiastic about the prospects of the sector over the coming year, with optimism in April at the lowest level seen so far in 2018.

However, new business expanded at its quickest rate for three months.

Read more: US manufacturing growth slows as trade tensions begin to take toll

IHS Markit’s Williamson said: “On balance, manufacturers seem sceptical that the rise in demand will persist, with future expectations of output growth slumping lower in April.”