A report from the Institute for Supply Management (ISM) showed on Monday the U.S. manufacturing sector’s activity expanded in April albeit at a slower pace than in March.

The ISM's index of manufacturing activity came in at 60.7 percent last month, down 4.0 percentage points from an unrevised March reading of 64.7 percent. The April reading pointed to the growth in the manufacturing sector for the 11th straight month but at the slowest pace since January.

Economists' had forecast the indicator to increase to 65.0 percent.

A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

According to the report, the New Orders Index stood at 64.3 percent, down 3.7 percentage points from the March reading, while the Production Index came in at 62.5 percent, a drop of 5.6 percentage points compared to the March reading, the Employment Index was at 55.1 percent, 4.5 percentage points lower than the March reading, the Supplier Deliveries Index recorded 75 percent, down 1.6 percentage points from the March figure, and the Inventories Index registered 46.5 percent, 4.3 percentage points lower than the March reading. Meanwhile, the Backlog of Orders Index registered 68.2 percent, 0.7 percentage point higher compared to the March reading, and the Prices Index posted 89.6 percent, up 4 percentage points compared to the March reading.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted that the manufacturing economy continued its growth in April but Survey Committee members reported that their companies and suppliers continue to struggle to meet increasing rates of demand due to COVID-19 impacts limiting availability of parts and materials. “Recent record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy,” he said. “Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential.” Fiore also said that the past relationship between the PMI and the overall economy indicated that the PMI for April (60.7 percent) corresponds to a 5-percent increase in real gross domestic product (GDP) on an annualized basis.