TEMPE, Ariz. — Economic activity in the manufacturing sector expanded in April for the fourth consecutive month, say the nation's supply executives in the latest ISM Manufacturing PMI Report.
The report was issued Friday by Susan Spence, MBA, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee:
"The Manufacturing PMI registered 52.7 percent in April, the same reading as March. The overall economy continued in expansion for the 18th month in a row. (A Manufacturing PMI above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index expanded for the fourth straight month after four straight readings in contraction, registering 54.1 percent, up 0.6 percentage point compared to March's figure of 53.5 percent. The April reading of the Production Index (53.4 percent) is 1.7 percentage points lower than March's reading of 55.1 percent. The Prices Index remained in expansion (or 'increasing' territory), registering 84.6 percent, a 6.3-percentage point jump from March's reading of 78.3 percent. In the last three months, the Prices Index has increased 25.6 percentage points to reach its highest level since April 2022 (84.6 percent). The Backlog of Orders Index registered 51.4 percent, down 3 percentage points compared to the 54.4 percent recorded in March. The Employment Index registered 46.4 percent, down 2.3 percentage points from March's figure of 48.7 percent.
"The Supplier Deliveries Index indicated slowing performance for the fifth month in a row after one month in 'faster' territory. The reading of 60.6 percent is up 1.7 percentage points from the 58.9 percent recorded in March; the index has risen in each of the last five months, meaning delivery times are increasingly slowing. (Supplier Deliveries is the only ISM PMI Reports index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
"The Inventories Index registered 49 percent, up 1.9 percentage points compared to March's reading of 47.1 percent. The Customers' Inventories Index reading of 39.1 percent is a 1-percentage point decrease compared to March.
"The New Export Orders Index reading of 47.9 percent is 2 percentage points lower than the reading of 49.9 percent registered in March, making it the second month in a row in contraction territory. The Imports Index registered 50.3 percent, 2.3 percentage points lower than March's reading of 52.6 percent.
"In April, U.S. manufacturing activity remained in expansion territory, growing at the same pace as the month before. Of the five subindexes that make up the PMI, the New Orders and Supplier Deliveries indexes indicated faster growth compared to the previous month, the Production Index grew at a slower rate, and the Employment and Inventories indexes remained in contraction.
"In this second month of the Iran War (at the time of data collection), 31 percent of the comments were positive and 69 percent negative, with a positive to negative sentiment ratio of 1 to 2.2. Among comments, the war was mentioned in 47 percent and tariffs in 18 percent. As was the case last month, some panelists referenced both topics within a single comment or in mixed sentiment.
"Two of four demand indicators (the New Orders and Backlog of Orders indexes) remain in expansion, although the Backlog of Orders Index dropped 3 percentage points compared to March. The New Export Orders Index remained in contraction with a 2-percentage point decrease, and the Customers' Inventories Index remains in 'too low' territory, contracting at a slightly faster rate. A 'too low' status for the Customers' Inventories Index is usually considered positive for future production.
"Regarding output, the Production Index is in expansion for the sixth month in a row (although it lost ground compared to March), and the Employment Index decreased by 2.3 percentage points and remains in contraction. Among panelists, 60 percent indicated that managing head counts remains the norm at their companies as opposed to hiring, and of those managing head counts, 34 percent are using layoffs and 43 percent using attrition or not backfilling positions.
"Finally, inputs (defined as supplier deliveries, inventories, prices, and imports) had another month of mixed results. The Supplier Deliveries Index indicated increasingly slowing deliveries, the Inventories Index contracted at a slower rate, and the Prices Index vaulted again — up another 6.3 percentage points to 84.6 percent, from 78.3 percent in March, and the highest reading from April 2022, when it was also at 84.6 percent. The Imports Index lost 2.3 percentage points for a reading of 50.3 percent, compared to 52.6 percent in March.
"Looking at the manufacturing economy, 19 percent of the sector's gross domestic product (GDP) contracted in April, compared to 16 percent in March, and the percentage of manufacturing GDP in strong contraction (defined as a composite PMI of 45 percent or lower) decreased to 2 percent, compared to 4 percent in March. The share of sector GDP with a PMI at or below 45 percent is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, four (Transportation Equipment; Machinery; Computer & Electronic Products; and Chemical Products) expanded in April."
The 13 manufacturing industries reporting growth in April — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Primary Metals; Plastics & Rubber Products; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Electrical Equipment, Appliances & Components; Paper Products; Fabricated Metal Products; Computer & Electronic Products; Chemical Products; and Furniture & Related Products. The three industries reporting contraction in April are: Wood Products; Petroleum & Coal Products; and Food, Beverage & Tobacco Products.
WHAT RESPONDENTS ARE SAYING
- "Demand for manufactured goods is trending higher versus last year; however, geopolitical uncertainty and rising oil and diesel prices continue to weigh on demand. Many customers are exercising caution and remain in a wait-and-watch mode." [Transportation Equipment]
- "Continued tariffs on products utilized in our product lines are being monitored by the business, with the business working to mitigate or limit tariff risk. Geopolitical risk, especially in the Middle East, as it pertains to commodity and energy markets remains a concern and is being monitored by the business. Supply chain risk concerns pertaining to increased cost and transit time for rerouted shipments due to conflict in the Red Sea, Strait of Hormuz and Suez Canal. These conditions are being monitored by the business and rerouting measures have been implemented where possible." [Transportation Equipment]
- "Continuing fluctuation in U.S. tariffs as well as market constraints for certain materials are affecting our current business. U.S. support of AI-related industry is also in flux which is causing some customer and investment hesitancy." [Computer & Electronic Products]
- "All products tied to crude, polyethylene resin or energy (liquified natural gas) have seen multiple increase spikes tied to the Iran crisis and market supply inflation." [Chemical Products]
- "Revenues are very strong. However, price increases are similar to a few years ago with the supply chain crisis. All imports from China are up 15 percent to 25 percent, which is impossible for us to absorb or to fully pass along. Our suppliers in China are telling us that oil is at an all-time high, which is putting huge challenges on their cost structures." [Chemical Products]
- "General uncertainty over the total impact of the U.S.-Iran war. Have not yet started to see the full impact of fuel increases but are aware they are coming." [Machinery]
- "Business levels have been decent this year, in line with the same period last year and improved from the second half of 2025. However, higher cost pressures are impacting margins." [Fabricated Metal Products]
- "Commodity markets remain mixed, with pockets of easing offset by ongoing volatility. Dairy and some soft commodities have cooled, while oils and grain-related inputs remain elevated given biofuel demand and feed costs. Pricing is still sensitive to policy changes, weather and global trade dynamics." [Food, Beverage & Tobacco Products]
- "Our business remains strong and stable, but there are a lot of concerns in the geopolitical arena. If the Iran conflict persists, the impact on market pricing and supply continuity could be extreme. Electronics component market remains very volatile (pricing and continuity) based on AI." [Miscellaneous Manufacturing]
ISM
