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Manufacturing Contracts For Second Month

Manufacturing Contracts for Second Month

May 2, 2025
"Demand and output weakened while input strengthened further, conditions that are not considered positive for economic growth," said ISM.

Economic activity in the manufacturing sector contracted in April for the second month in a row, following a two-month expansion preceded by 26 straight months of contraction, according to the latest report from ISM. 

The Manufacturing PMI registered 48.7% in April, 0.3 percentage point lower compared to the 4% recorded in March.

 "In April, U.S. manufacturing activity slipped marginally further into contraction after expanding only marginally in February," said Timothy Fiore of ISM. "Demand and output weakened while input strengthened further, conditions that are not considered positive for economic growth. "

Index statistics are as follows:

Supplier Deliveries Index indicated a continued slowing of deliveries, registering 55.2%, 1.7 percentage points higher than the 53.5% recorded in March.

Inventories Index registered 50.8%, down 2.6 percentage points compared to March's reading of 53.4% 

New Orders Index contracted for the third month in a row following a three-month period of expansion; the figure of 47.2% is 2 percentage points higher than the 45.2% recorded in March. 

Production Index registered 44%,  4.3 percentage points lower than March's figure of 48.3%. The index returned to contraction last month after two months of expansion, preceded by eight months of contraction.

Prices Index remained in expansion territory, registering 69.8%, up 0.4 percentage point compared to the reading of 69.4% in March.

Backlog of Orders Index registered 43.7%, down 0.8 percentage point compared to the 44.5% recorded in March.

New Export Orders Index reading of 43.1% is 6.5 percentage points lower than the reading of 49.6% registered in March.

Imports Index dropped into contraction in April, registering 47.1%, 3 percentage points lower than March's reading of 50.1%.

Employment Index registered 46.5 percent, up 1.8 percentage points from March's figure of 44.7. 

What Respondents are Saying:

  • "Uncertainty over tariffs is providing a big challenge from both Tier-1 suppliers we will have to pay tariffs on directly and Tier-2 suppliers that will try to pass tariffs through to us in the form of price increases and tariff surcharges." [Chemical Products]
  • "Tariffs impacting operations — specifically, delayed border crossings and duties calculations that are complex and not completely understood. As a result, we are potentially overpaying duties. Unsure of potential drawbacks. Implementation of tariffs and their application is sudden and abrupt. The business is taking countermeasures." [Transportation Equipment]
  • "Business climate is apprehensive, and with tariff costs implemented, all inbound Chinese shipments are on hold. It is not feasible for our business or customers to sustain the pricing required to provide an acceptable margin." [Computer & Electronic Products]
  • "The most important topic is tariffs. Risks include margin erosion due to rising operational costs and freight delays disrupting delivery timelines. Supplier relationships are strained by pain-share negotiations, and competitors are gaining share by importing from lower-tariff regions." [Food, Beverage & Tobacco Products]
  • "Tariff whiplash is causing us major issues with customers. The two issues we are seeing: (1) customers are holding back orders to understand what is happening with tariffs on their products or (2) they are forcing us to accept the tariffs, which causes us to 'no quote' the job as we cannot take on that type of risk for an order." [Machinery]

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