Implications: Don't fret the headline reading.  Manufacturing activity continued to rise in April, just at a slower pace than in March.   And growth remained broad based, with sixteen of eighteen industries reporting growth, while just one reported decline.  A look at the major measures of activity shows expansion continued across the board, with all measures remaining above 50.  The new orders index showed the largest slowdown in expansion in April, falling to 57.5 from 64.5.  But it should be remembered that February and March were the highest readings for new orders in more than three years, and the April reading of 57.5 remains well above the 55.5 average for the new orders index over the past five years.  Meanwhile production activity rose in April to 58.6 from 57.6 in March.  With these two forward looking indices continuing to show healthy growth, expect the manufacturing recovery to continue as well.  The employment index fell to 52.0 in April, coming off March's strongest monthly reading going back to mid-2011.  That said, and as we note regardless of the direction the employment index moves in any given month, manufacturing remains a small portion of total employment.  For a better picture of labor market health, we tend to focus on broader signals (initial claims, earnings growth, and consumer spending) which have shown constant strength in recent years despite some turbulent times for the manufacturing sector.  On the inflation front, the prices paid index slipped to 68.5 from 70.5 in March, despite twenty commodities rising in price and not a single commodity reported lower.  Any suggestion that the trend in rising prices have just been a reflection of the rebound in oil prices misses the mark.  Rising economic activity, the lagged effect of loose monetary policy, is putting pressure on a wide variety of inputs, and putting pressure on the Fed not to fall behind the curve in raising rates that are too low for the current environment.  In other economic news this morning, construction spending declined 0.2% in March, as a pickup in homebuilding was more than offset by declines in spending on education and commercial projects.  However, construction was revised up for prior months and so it now looks like real GDP grew at a 0.8% annual rate in Q1, not the 0.7% reported Friday.

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