News & Insights

Manufacturing activity grew at a slightly slower pace in the Tenth District in April, with the month-over-month composite index edging down to 10 in April from 11 in March. On the other hand, expectations for future activity improved 2 points to 18. The month-over-month activity loss was due to a decline in durable manufacturing, while nondurable manufacturing activity increased further. At the same time, all indexes except new orders for exports were positive in April. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico.

The production and shipments indexes both declined but remained positive, decreasing from 11 to 10 and from 20 to 15, respectively. Meanwhile, new orders fell from 15 to 12. The employment index moved down 5 points to 2. At the same time, the pace of growth for prices paid and prices received strengthened, with raw materials prices jumping 26 points to 63 and prices received rising 6 points to 25. Furthermore, the indexes for prices received and paid both increased over the year, moving up to 57 and 88, respectively.

In April, survey respondents were asked special questions about changes in energy costs and the ability to pass through energy-related costs. Overall, 93% of firms reported that they have experienced higher transportation costs in the last two months, 43% saw higher natural gas costs and 38% noted higher electricity costs. Furthermore, over two-thirds of firms that have experienced higher energy costs said they will pass on 0% to 20% of those costs to customers, 3% will pass on 21% to 40%, 8% will pass through 41% to 60%, 4% will pass on 61% to 80% and 8% will pass on 81% to 100%. Meanwhile, 6% of firms have had to decrease prices.

The S&P Global Flash U.S. Manufacturing PMI increased from 52.3 to 54.0 in April, a 47-month high. This continues the trend of nine consecutive months of growth. Factory production and new order growth improved in April, with both experiencing their strongest expansion since 2022. Meanwhile, export orders declined after stagnating the prior month as a result of uncertainty caused by the conflict in the Middle East.

Inventories grew marginally in April as companies continued to purchase safety stock amid delivery concerns. At the same time, supplier delivery time lengthened to the greatest extent since August 2022, with respondents attributing the increase to the conflict in the Middle East. Manufacturers’ input cost inflation rose to a ten-month high and at the second fastest rate since July 2022. Meanwhile, selling price inflation also moved up, resulting in the largest jump in average selling prices since July 2022. Overall, price increases accelerated for manufacturers and the service industry.

Overall business activity rose to a three-month high, stepping up from 50.3 in March to 52.0 in April. While manufacturing growth accelerated, the services sector rose only slightly, moving to a two-month high. Overall, growth of new orders accelerated, driven by domestic demand as export orders fell at an increased rate. Employment grew marginally as manufacturing headcounts fell for the first time in nine months.

Furthermore, optimism about future business conditions improved in April, with manufacturers’ optimism rising to the highest level in over a year. The optimism reflected manufacturers’ upturn in orders, additional investment in marketing and hopes of reshoring. In addition, the outlook for service providers remained low as war-related concerns further exacerbated cost-of-living concerns.

House Energy and Commerce Bill Would Protect Consumers and Clarify Rules so Manufacturers Can Continue to Innovate, Compete

Washington, D.C. – Manufacturers today welcomed the introduction of the SECURE Data Act by House Energy and Commerce Committee Chairman Brett Guthrie (R-KY) and Vice Chair John Joyce (R-PA).

National Association of Manufacturers Executive Vice President Erin Streeter issued the following statement endorsing the SECURE Data Act:

“Processing personal data has become integral to modern manufacturing operations and modern manufactured products. Manufacturers are encouraged that this first-of-its-kind federal law would establish a uniform national framework that is both forward-looking and adaptable to new technology, while avoiding the regulatory morass of a 50-state patchwork. Manufacturers believe granting consumers much-needed privacy protections and creating clear guidelines will keep the industry innovating and competing in the age of AI. We thank Chairman Guthrie and Vice Chair Joyce for championing this legislation.”

-NAM- 

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.95 trillion to the U.S. economy annually and accounts for nearly 52% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

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The NFIB Small Business Optimism Index stepped down 3 points to 95.8 in March, falling below the 52-year average of 98.0. March’s decrease was due primarily to a decline in earnings trends and expected business conditions. Of the 10 components included in the index, eight decreased and two stayed the same. Meanwhile, the Uncertainty Index rose 4 points to 92, still well above the 51-year average (68) and above the average since 2016 (80).

Taxes were again cited as the top concern for small business owners, with 19% reporting them as the most important problem, unchanged from February. The share of business owners reporting labor quality as the top problem stayed the same in March at 15%, with 32% struggling to fill open jobs and 52% reported hiring or trying to hire in March. Meanwhile, inflation ranked third in the list of concerns, with 14% reporting it as their top problem, up 2 points from February, with a net 25% raising prices.

A net 33% of small business owners reported raising compensation, down 1 point in March after moving up 2 points in February. Meanwhile, 18% of business owners plan to increase compensation in the next three months, down 4 points from February and the lowest reading since July. Pressure on profitability strengthened in March, with positive profit trends falling 11 points from February to a net negative 25%. Among owners reporting lower profits, 32% blamed weaker sales, 19% mentioned usual seasonal changes, 10% cited increased material costs and 7% noted labor costs. Meanwhile, 5% reported their last loan was harder to get than previous attempts, unchanged from February, and a net negative 3% of owners cited paying a higher interest rate on their most recent loan, unchanged from the prior month.

The outlook for general business conditions fell 7 points to 11%, remaining above the historical average of 4%. Furthermore, expectations for better business conditions are down 10 points from March 2025. At the same time, 11% reported that it is a good time to expand their business, down 4 points from February and a rather weak reading compared to times of economic expansion. Overall, growth has slowed and uncertainty has risen, as small business owners anticipate worse conditions in the future.

U.S. import prices increased 0.8% in March, after rising 0.9% in February, with higher nonfuel and fuel prices driving the increase. Over the year, import prices advanced 2.1%, the largest 12-month increase since December 2024. Meanwhile, U.S. export prices climbed 1.6% in March, driven by higher prices for nonagricultural and agricultural exports. Over the past year, export prices rose 5.6%, the largest over-the-year increase since November 2022.

In March, U.S. import prices for manufacturing rose 2.8% over the year, as most of the industry experienced price increases. Primary metal manufacturing experienced the most significant over-the-year U.S. import price increase in March, surging 35.1%. On the other hand, the greatest yearly decline in U.S. import prices occurred in beverage and tobacco product manufacturing, which fell 12.1% from March 2025. Meanwhile, U.S. export prices for manufacturing in March advanced 4.9% over the year, with primary metal manufacturing export prices exhibiting the largest rise (39.1%).

Fuel import prices climbed 2.9% in March, the largest monthly rise since January 2025, after increasing 2.4% in February. Higher prices for petroleum more than offset lower prices for natural gas. Import prices for petroleum and petroleum products climbed 9.4% in March. However, prices for fuel imports fell 6.0% from March 2025. At the same time, natural gas prices plummeted 71.0% in March and 49.8% over the year.

Nonfuel import prices increased 0.6% in March, after advancing 0.8% in February. Higher prices for nonfuel industrial supplies and materials, capital goods, consumer goods and foods, feeds and beverages drove the increase. The price index grew 2.8% over the past year, the largest over-the-year gain since October 2022.

After moving up 0.9% in February, agricultural export prices rose by a similar amount in March. Over the past 12 months, agricultural exports advanced 3.4%. Meanwhile, nonagricultural exports stepped up 1.7% in March. Higher prices for nonagricultural industrial supplies and materials more than offset lower prices for capital and consumer goods. Over the past year, nonagricultural export prices climbed 5.8%.

Manufacturing activity in New York state expanded in April, with the headline business conditions index rising 11.2 points to 11.0. The new orders index increased 12.9 points to 19.3, while the shipments index soared 27.1 points to 20.2, the highest level for both indexes since 2023. Unfilled orders decreased 1.7 points to 9.1, while inventories moved down 1.8 points to 5.1, indicating business inventories are growing but at a slower pace. Delivery times shortened, ticking down 1.6 points to 12.1, and supply availability worsened, declining 6.2 points to -10.1.

Employment increased in April, with the index for the number of employees rising 4.0 points to 9.8. At the same time, the average employee workweek jumped to 13.7 from 1.9, signaling a significant increase in hours worked in April. The prices paid index rose 14.4 points to 51.0, while the prices received index edged up 0.4 points to 21.8, reflecting a faster pace of increase in both prices paid and prices received.

In April, firms’ optimism regarding the future declined but remained positive, with the future business activity index falling 11.4 points to 19.6. In the next six months, new orders are expected to rise but at a slower pace compared to the prior month at 24.8. The future employment index moved down 4.1 points to 18.1, suggesting an anticipated slower pace of employment growth over the next six months. Meanwhile, input and selling price expectations are forecasted to increase at a faster pace, rising from 43.1 to 61.6 and from 32.4 to 38.6, respectively. Furthermore, capital spending plans weakened in April, falling from 21.6 to 13.1.

In April, Philadelphia’s regional manufacturing activity expanded for the fourth consecutive month, with the index for general business activity advancing from 18.1 to 26.7. This month, 32.6% of firms reported increases in activity, while only 5.9% noted decreases. The index for new orders jumped from 8.6 to 33.0, while the shipments index climbed 11.8 points to 34.0. Meanwhile, the employment index turned negative, falling 5.9 points to -5.1, and the average employee workweek index moved up from 2.8 to 7.7.

The prices paid and prices received indexes both rose in April, increasing from 44.7 to 59.3 and from 21.2 to 33.5, respectively. As has been the case for many months, the prices received index remained lower than the prices paid index, indicating that manufacturers have been absorbing a portion of higher costs paid.

Looking ahead, most indicators showing future expectations for growth declined but remain elevated. After falling 2.8 points in March, expectations for future business activity ticked up 0.8 points to 40.8 in April. The gain came from a decline in the proportion of firms expecting a decrease in activity (15.7%). At the same time, the proportion of firms expecting an increase in activity (56.5%) moved up in April. The future new orders index dropped from 49.6 to 45.7, while the capital expenditures index climbed from 25.8 to 35.2. The future prices paid index dipped from 53.7 to 50.2, while the future prices received index rose from 38.4 to 50.2. Additionally, the index for future employment moved down from 40.4 to 35.9.

In April, firms were asked about changes in wage rates and compensation packages as well as expectations for input and labor costs. Of those responses, 46.2% of firms indicated wage rates and compensation costs have increased over the past three months, 53.8% reported no change and no firms indicated a decrease during that time. When asked about input and labor costs, firms expect higher energy costs (up 5% to 7.5%), higher cost of health benefits (up 4% to 5%) and smaller increases in other categories. Notably, 19.2% of respondents anticipate both energy and health benefits costs to rise by more than 12.5% during 2026.

The Producer Price Index for final demand (also known as wholesale prices) rose 0.5% over the month in March, unchanged from the 0.5% increase in February and below expectations. Over the year, producer prices jumped 4.0%, up from 3.4% in February and the largest 12-month increase since February 2023. Meanwhile, prices for final demand excluding foods, energy and trade services ticked up 0.2% over the month in March after rising 0.5% in February. Prices for these goods advanced 3.6% from March 2025.

Within final demand, prices for services were unchanged in March, after advancing 0.3% in February. Meanwhile, prices for goods soared 1.6% in March, the largest monthly increase since August 2023, after moving up 1.0% in February. Within the final demand services index, prices for airline passenger services rose 2.8%, helping offset the 6.0% drop in the margins for food and alcohol wholesaling. Within the final demand goods index, prices for gasoline surged 15.7%, accounting for nearly half of the March increase. At the same time, prices for fresh and dry vegetables fell 10.7% from February but were up 49.0% from March 2025.

Prices for processed goods for intermediate demand rose 2.6% in March, the largest monthly increase since May 2022, after moving up 1.6% in February. Within the index, prices for diesel fuel soared 42.0% after rising 13.1% in February. Meanwhile, prices for primary nonferrous metals and secondary nonferrous metals were up 67.0% and 41.0% year-over-year, respectively. Over the year, prices for processed goods for intermediate demand rose 6.6%, the largest annual increase since November 2022.

Meanwhile, prices for unprocessed goods for intermediate demand decreased 2.6% in March, the largest decline since April 2025, after moving up 4.8% in February. The monthly decline was led by a 51.7% drop in natural gas prices, which are down 8.6% over the year. In contrast, prices for crude petroleum jumped 20.2% in March and 12.3% from March 2025. Over the year, prices for unprocessed goods for intermediate demand rose 4.9% after moving up 3.5% in February.

Industrial production declined 0.5% in March, while manufacturing output ticked down 0.1% after moving up 0.4% in February. At 97.3% of its 2017 average, manufacturing production advanced 0.5% from March 2025. Capacity utilization for manufacturing was 75.3%, down 0.2 percentage points from February but up 1.1% over the past year. Capacity utilization remained 2.9 percentage points below its long-term average from 1972 to 2025.

In March, production for most major market groups slowed. Consumer goods production decreased 1.0%, while business equipment output ticked down 0.3%. The contraction in consumer durables (down 1.8%) was led by the output of automotive products falling 2.8%. Meanwhile, the index for consumer nondurables moved down 0.8%, led by a drop in the index for clothing (down 1.0%). Among business equipment, the 2.2% decrease in transit equipment led the decline. At the same time, the index for materials edged down 0.6%, while the index for construction supplies rose 0.4% and the index for business supplies ticked down 0.1%.

Durable goods manufacturing fell 0.2% in March but increased 1.8% from the year prior. The largest monthly decline occurred in motor vehicles and parts (down 3.7%), while electrical equipment, appliances and components registered the largest gain (up 1.1%). Meanwhile, led by a 2.3% decrease in printing and support output, nondurable manufacturing edged down 0.1% in March and 0.6% from March 2025.

NAM: Sen. Lankford, H.R. 1 permanently restored 100% bonus depreciation for qualifying property acquired after Jan. 19, 2025, reversing a phasedown that had reduced the deduction to 40% in 2025 and would have eliminated it by 2027. As a member of the Senate Finance Committee, what does permanent full expensing mean for manufacturers making long-lived capital investment decisions, and how does permanency change their planning horizon relative to a temporary extension?

Sen. Lankford: Permanency is the difference between short-term tax relief and long-term economic certainty. Manufacturers are not making one-year decisions. They are making 10-, 20-, even 30-year capital allocation decisions on facilities, heavy equipment and production lines. When full expensing is temporary or phasing down, it distorts those decisions and often forces companies to either accelerate investments inefficiently or delay them altogether.

By making 100% expensing permanent, we are giving manufacturers confidence that the tax treatment will be consistent across the full lifecycle of an investment. That stability lowers the cost of capital, improves after-tax returns and allows companies to plan rationally instead of reacting to arbitrary deadlines.

That is why I have pushed for permanency through efforts like the ALIGN Act, which was included in the Working Families Tax Cuts Act, because pro-growth policy only works if businesses can rely on it over the long term.

NAM: During the phasedown years, when bonus depreciation fell from 100% to 80% to 60% to 40%, manufacturers reported delaying or canceling major capital purchases because the economics no longer worked as favorably. Now that 100% expensing is restored permanently, what evidence are you seeing—in Oklahoma or nationally—that manufacturers are moving forward on investments that were on hold?

Sen. Lankford: What we are hearing, both in Oklahoma and across the country, is that the return to full expensing is beginning to unlock projects that were sitting on the sidelines. During the phasedown, when expensing dropped from 100% to 40%, many of those investments simply didn’t pencil out.

That lines up with what we know about Oklahoma’s economy. The state is heavily concentrated in capital-intensive sectors like oil and gas, manufacturing and aerospace. Oil and gas alone accounts for a significant share of state GDP, and when you include the broader supply chain, it touches more than a quarter of the economy. These are exactly the types of industries where cost recovery drives investment decisions.

In practical terms, that showed up in delayed energy projects, deferred equipment purchases and slower expansion of processing and manufacturing facilities. In manufacturing and aerospace, companies stretched the life of existing equipment and postponed automation upgrades.

Now, with full expensing permanently restored, those same businesses are revisiting projects. That includes moving forward on pipeline investments, placing new equipment orders and advancing plant and infrastructure upgrades. The key shift is that companies are no longer trying to time the tax code. They are making decisions based on operational need and long-term growth.

NAM: H.R. 1 also raised the Section 179 expensing cap from $1 million to $2.5 million, providing a complementary benefit particularly for smaller manufacturers. The legislation also expanded bonus depreciation to manufacturing facilities. How do bonus depreciation, the enhanced Section 179 and the new deduction for factories work together to drive capital investment across manufacturers of all sizes, and what are you hearing from businesses about how these provisions are impacting them?

Sen. Lankford: For smaller and mid-sized manufacturers, Section 179 is often the tool they use the most. These are businesses that are upgrading equipment, adding a new machine or expanding part of their shop floor. They are not doing massive projects all at once. They need something simple, predictable and easy to use. Increasing the cap means more of those everyday investments can be written off immediately, which helps with cash flow and makes it easier to keep reinvesting.

For larger manufacturers, the scale is different. They are looking at bigger equipment purchases, full production lines and major upgrades across facilities. Bonus depreciation matters here because it allows them to expense those larger investments upfront. When you are talking about large equipment investments, that timing difference can influence whether a project moves forward now or gets pushed out.

The addition of expensing for manufacturing facilities is a big step forward. For a lot of companies, the building is one of the most expensive parts of the project, not just the equipment inside it. Whether it is a new plant or expanding an existing one, being able to expense both the facility and the equipment reflects the full cost of what it takes to grow.

When you put all of that together, it creates a system that works for manufacturers at different sizes and at different stages. It supports the smaller, steady investments and the larger, long-term projects. It does not solve every challenge, but it removes a major barrier and lets companies make decisions based on what they actually need to grow.

NAM: Thank you, senator. What can NAM members do to help manufacturers understand and act on the restored bonus depreciation and enhanced Section 179 provisions?

Sen. Lankford: The most important thing NAM members can do is make sure permanent expensing actually reaches the shop floor. A lot of small manufacturers may not have heard about what changed, and even if they have, they may not immediately connect a tax provision to a real equipment decision. It’s a simple but important message: if you’ve been holding off on a new piece of equipment, talk to your accountant now, because you may be able to write off the full cost this year. Pro-growth policy only delivers if manufacturers know about it and use it, and that’s where NAM can make a real difference. That’s what will drive long-term investment, create jobs and grow local economies.