Economy Expanded in April, Purchasers Say

NEW YORK — The economy reversed a three-month slowdown in April as production and new orders picked up sharply, according to a survey of purchasing managers released Sunday.

The National Assn. of Purchasing Managers, a trade group with about 30,000 members, said its index of economic activity rose to 54.9% last month from 53.3% in March.

The index had declined the first three months of the year, indicating a slowing in economic growth. A reading above 50% generally indicates economic expansion, while a reading below that benchmark indicates that the economy is declining, the group says.

For the first four months of this year, the index has averaged 55.1%.

The April increase was sparked by a surge in production. Thirty-seven percent of the 250 purchasing managers surveyed reported increased production at their companies, while 53% said output remained the same as in March and 10% said it fell. In March, 29% of the respondents said production was up.

Another factor boosting the index was an increase in new orders. Thirty-seven percent of the respondents said they had more new orders, compared to 29% in March. Forty-nine percent said orders were running at the same rate of March and 14% said they had fewer new orders.

New orders tend to signal how well the economy will fare in succeeding month. April’s economic expansion was forecast by a surge in new orders in March.

“The economy began the second quarter with continuing moderate growth,” said Robert J. Bretz, chairman of the purchasing managers’ survey committee. “New orders remain very healthy, particularly export orders.”

The survey also found:

* The purchasing managers reported a slight pickup in vendor deliveries, which is considered a positive economic signal because it indicates orders are coming in faster than companies can fill them. Twenty-one percent of the executives surveyed reported slower deliveries, down from 23% in March, while 74% reported no change in the delivery rate, up from 72% the previous month.

* Inventories remained at roughly the same levels as in March.

* A significant number of purchasing managers reported higher prices. Seventy percent reported prices rose in April, compared to 55% reporting higher prices the previous month.