Economic Data and Growth

In April, the U.S. manufacturing sector expanded for the fourth consecutive month and at the same pace as the prior month, with the ISM Manufacturing® PMI remaining at 52.7% from March. Certain demand indicators, such as the New Orders and Backlog of Orders indexes, stayed in expansion territory, while the New Export Orders Index remained in contraction territory. Meanwhile, the Customers’ Inventories Index continued to contract into “too low” territory and at a faster pace, falling 1.0 percentage point to 39.1. Meanwhile, the Production Index expanded at a slower pace in April, dropping from 55.1% to 53.4%.

The New Orders Index expanded for a fourth consecutive month in April and at a slightly faster pace, ticking up 0.6 percentage points from March to 54.1%. Of the six largest manufacturing sectors, four—machinery, transportation equipment, chemical products and computer and electronic products—reported an increase in new orders. Optimism about near-term demand turned positive, with 1.6 positive comments for every negative comment.

The New Export Orders Index contracted for a second consecutive month in April, dropping 2.0 percentage points to 47.9%. Respondents remained concerned about trade and war frictions, with 1.6 negative comments for every positive comment. Meanwhile, the Imports Index expanded for the third consecutive month but at a slower pace in April, down 2.3 percentage points from March to 50.3%.

The Employment Index contracted for the 31st consecutive month and at a faster pace than the prior month, declining 2.3 percentage points from March to 46.4%. Of the six largest manufacturing sectors, three—transportation equipment, computer and electronic parts and machinery—reported increased employment. For every comment on hiring, 1.7 respondents noted reduced headcounts.

After surging 7.8 percentage points in March, the Prices Index jumped another 6.3 percentage points in April to 84.6%, indicating raw materials prices grew for the 19th straight month and at a much faster pace than the prior month. The index hit its highest reading since April 2022. Of the six largest manufacturing sectors, all reported increased prices. The increase continued to be driven by higher steel and aluminum prices impacting the entire supply chain and the tariffs applied to most imported goods, as well as increases in petroleum-based products as a result of the Middle East conflict. Roughly 70.3% of companies reported paying higher prices, up from 59.4% in March and from 21.0% in January 2025.