News & Insights

The S&P Global Manufacturing PMI was 54.5 in April, up from the March reading of 52.3. New orders grew at the fastest pace in four years in April, but exports declined for the 11th consecutive month as tariffs and the conflict in the Middle East drove up costs and hindered foreign demand. Meanwhile, input and selling prices increased at faster paces as input and output cost inflation both hit 10-month highs. The conflict in the Middle East had a notable impact on new orders in April, with companies purchasing now to avoid price increases and supply shortages before they become more widespread.

Production rose during the month, and despite an uptick in sales, stocks of finished goods grew for the first time in three months. Employment declined for the first time in nine months as higher raw material costs have started influencing hiring decisions. Meanwhile, delivery times continued to lengthen, a result of the conflict in the Middle East causing widespread material shortages.

Expectations that the impact of the conflict in the Middle East will be less than previously forecasted drove business confidence to its highest level since February 2025. Furthermore, firms have a positive outlook for production, partly attributable to the large gains in new orders in April.

As anticipated, the Federal Open Market Committee maintained its interest rate target range at 3.50%–3.75% at its April meeting. On the other hand, one FOMC member—Stephen Miran—dissented from the action, preferring to lower the target range by 25 basis points. In a change to its previous statement, the FOMC noted that inflation remains elevated, in part reflecting the recent increase in global energy prices. Furthermore, three FOMC members—Beth Hammack, Neel Kashkari and Lorie Logan—supported keeping the target range steady but did not support the inclusion of an easing bias in the statement regarding considering “additional adjustments to the target range.” Collectively, there were four dissents to the policy statement out of 12 members, the most since 1992.

In the press conference following the meeting, Federal Reserve Chairman Jerome Powell said that economic activity continues to expand at a solid pace, with job gains staying low while inflation has moved up and remains elevated. Chairman Powell noted that higher oil prices due to events in the Middle East will push up the overall inflation rate in the near term, but the scope and duration of potential effects on the economy remain unclear, as does the future of the conflict itself. He reaffirmed that the FOMC is well positioned to determine the extent and timing of additional adjustments to its policy stance. This press conference was Powell’s last as chairman, but he noted that he planned to remain on the central bank’s board for a period of time to be determined and at least until the resolution of the administration’s legal challenges against the Federal Reserve, which he believes are battering the institution.

The FOMC’s summary of economic projections, which maps out the Federal Reserve’s expectations for where interest rates may be headed in the future, generally is released in conjunction with every other FOMC meeting. Since the March meeting included a release of economic projections, there was not a release in conjunction with the April FOMC meeting. The March summary signaled a mixed stance regarding where monetary policy should go in 2026. Twelve Federal Reserve officials projected additional rate cuts across 2026, while seven anticipated no additional rate cuts this year. Furthermore, a majority of the officials who predicted a rate cut this year anticipated just one 25-basis-point cut across 2026.

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.

Real GDP increased at an annual rate of 2.0% in the first quarter of 2026, up from a 0.5% rise in the fourth quarter but slightly below consensus expectations. The increase in GDP during the first quarter mostly reflected increases in investment, consumer spending on services, exports and government spending, which were partially offset by reductions in consumer spending on goods and an increase in imports. Since, by definition, GDP measures domestic output, imports are subtracted from the final calculation since they are reflected in other parts of the equation, such as inventories and consumption.

Consumer spending grew at an annual rate of 1.6%, down from a 1.9% increase in the fourth quarter, with spending on services (up 2.4%) driving the gain, while spending on goods declined (down 0.1%). Consumer spending on nondurable goods edged down 0.2%, but spending on durable goods stayed the same after ticking up 0.1% in the fourth quarter. The decline in nondurable goods consumer spending was driven by food and beverages and clothing and footwear, with increases in other nondurable goods categories. Meanwhile, for consumer spending on durable goods, increases in motor vehicles and parts, furnishings and other durable goods were offset by drops in spending on recreational goods and vehicles. Within services, spending increases were relatively widespread, with health care being the largest contributor to the gain.

Investment grew 8.7% at an annual rate in the first quarter, after rising 2.3% in the fourth quarter. The improvement was driven by 13.0% and 43.4% surges in intellectual property products and information processing equipment investments, respectively, up from 5.4% and 4.3% in the fourth quarter. Meanwhile, business spending on structures declined 6.7%. Exports jumped 12.9% in the first quarter, with the rise primarily concentrated in goods exports (up 18.1%). At the same time, imports soared 21.4% in the first quarter, with the increase also primarily concentrated in goods (up 25.8%). The jump in federal government spending (up 9.3%) was driven by the rebound from the extended government shutdown in the fourth quarter, with nondefense spending up 20.3%. Meanwhile, state and local government spending increased 1.6% in the first quarter, up slightly from the 1.5% rise in the prior quarter.

NAM: Sen. Young, H.R. 1 restored immediate domestic R&D expensing, ending the amortization requirement that had been in effect since 2022. You have been one of the Senate’s most dedicated champions of R&D competitiveness through the American Innovation and Jobs Act. How did your years of sustained advocacy help deliver this outcome in the final reconciliation package?

Sen. Young: The American Innovation and Jobs Act laid the foundation for a multiyear, bipartisan effort to restore full and immediate expensing. From the outset, our goal was to make clear that strong R&D incentives are essential to maintaining America’s competitive edge. With the support of my Senate Finance Committee colleagues and active industry partners like the NAM, we built a broad coalition that understood the real-world consequences of the amortization treatment. This sustained advocacy was critical to ensuring this policy was included in the final version of the One Big Beautiful Bill Act.

NAM: The amortization requirement that was in effect from 2022 to 2024 was particularly damaging for manufacturers, who conduct 52% of private-sector research. Now that immediate expensing is restored and prior-year costs can be accelerated, what are Indiana manufacturers or other stakeholders telling you about how this relief changes their investment and hiring plans?

Sen. Young: During the three-year span when businesses had to amortize, I heard from countless Hoosier employers, including many in the manufacturing and life sciences industries, about how the R&D tax treatment was forcing incredibly difficult decisions. These included delaying R&D projects, scaling back hiring for key personnel like engineers and scientists and, in some cases, even considering shifting research activity overseas. That kind of uncertainty is especially challenging for industries that rely on long-term investment cycles.

Now that immediate expensing has been restored, and restored on a permanent basis, there is a renewed sense of confidence. Businesses back home have shared with me that they are moving forward with previously delayed investments, expanding their research operations and accelerating plans to grow their workforce. Those are the types of business decisions we should be encouraging in our tax code.

NAM: Restoring R&D expensing is a major step, but the United States still trails competitors like China in the overall generosity of R&D incentives. What is your honest assessment of where America now stands in the global innovation competition, and what further actions—whether through additional tax policy, increased federal R&D investment or streamlined regulatory pathways—should Congress prioritize to ensure the U.S. remains the world’s leading destination for manufacturing innovation?

Sen. Young: As our global competitors, like China, are expanding their R&D incentives, we simply cannot allow our nation and our economy to fall behind. To remain the world’s leading destination for innovation and advanced manufacturing, we need a more comprehensive approach. That includes increasing federal investment in critical research areas, ensuring our regulatory environment supports the commercialization of new technologies and strengthening workforce development and apprenticeship streams so that we can better connect students and workers to high-demand careers in manufacturing and innovation.

My focus going forward is on advancing policies that not only restore our competitiveness but position the United States to lead in rapidly growing industries like advanced manufacturing, artificial intelligence, quantum and biotechnology.

NAM: Thank you, Sen. Young. What can NAM members do to help manufacturers take advantage of the restored R&D deduction and to support continued investment in American manufacturing innovation?

Sen. Young: I would encourage NAM members to continue engaging with policymakers and sharing examples of how R&D incentives are driving investment, hiring and innovation in their communities. Those real-world stories about the advancements companies are making are incredibly important as we consider future policy decisions.

I’d also urge manufacturers to fully utilize the restored deduction and continue investing in their workforce and research capabilities. By doing so, and by staying engaged in the policymaking process, you can help ensure we build on this progress and continue strengthening America’s leadership in manufacturing.

Marking the approach of H.R. 1’s first anniversary this July, the NAM is highlighting the law’s pro-manufacturing tax wins. This week, we spoke to Sen. Todd Young (R-IN), a leading proponent of immediate R&D expensing, which the law successfully restored.

How they did it: When asked about his efforts to get this key provision reinstated, Sen. Young said, “From the outset, our goal was to make clear that strong R&D incentives are essential to maintaining America’s competitive edge.”

• “With the support of my Senate Finance Committee colleagues and active industry partners like the NAM, we built a broad coalition that understood the real-world consequences of the amortization treatment.”

Making a difference: “During the three-year span when businesses had to amortize, I heard from countless Hoosier employers, including many in the manufacturing and life sciences industries, about how the R&D tax treatment was forcing incredibly difficult decisions,” said Sen. Young. “These included delaying R&D projects, scaling back hiring for key personnel like engineers and scientists and, in some cases, even considering shifting research activity overseas.”

• “Now that immediate expensing has been restored, and restored on a permanent basis, there is a renewed sense of confidence,” he continued. “Businesses back home have shared with me that they are moving forward with previously delayed investments, expanding their research operations and accelerating plans to grow their workforce.”

Why it matters: “As our global competitors, like China, are expanding their R&D incentives, we simply cannot allow our nation and our economy to fall behind,” said Sen. Young.

• “My focus going forward is on advancing policies that not only restore our competitiveness but position the United States to lead in rapidly growing industries like advanced manufacturing, artificial intelligence, quantum and biotechnology.”

Advice for manufacturers: When asked what manufacturers should do now that immediate R&D expensing has been made permanent, Sen. Young said, “I would encourage NAM members to continue engaging with policymakers and sharing examples of how R&D incentives are driving investment, hiring and innovation in their communities. Those real-world stories about the advancements companies are making are incredibly important as we consider future policy decisions.”

• “I’d also urge manufacturers to fully utilize the restored deduction and continue investing in their workforce and research capabilities. By doing so, and by staying engaged in the policymaking process, you can help ensure we build on this progress and continue strengthening America’s leadership in manufacturing.”

Read the whole thing: You can read the whole Q&A here.

As workforce shortages persist, some manufacturers have turned to hiring of individuals who have been involved in the justice system—called second chance hiring—as a practical solution to fill critical roles and improve retention.

In recognition of Second Chance Awareness Month, the Manufacturing Institute—the workforce development and education affiliate of the NAM—convened leaders from Toyotetsu Texas and JBM Packaging to discuss what it really takes for second chance hiring programs to succeed.

• This virtual discussion was part of the MI’s monthly Solution Series, which offers manufacturers timely, high-impact, actionable insights to address workforce challenges.

The business case: For TTTX and JBM Packaging, second chance hiring does more than just help their communities—it’s a strategic response to a business need. Justice-impacted individuals are an often-overlooked talent population who tend to demonstrate strong loyalty and long-term commitment to employers who give them a chance. Their high engagement and motivation to succeed can impact their shop floor culture positively.

• “We started [second] chance hiring because we had more work than we had workers,” said JBM Packaging Leader of Learning and Development Jacqueline Cooley. “We were looking for a way to get people in the door, to keep people [and] to produce the packaging we need.”
• Today, 46% of JBM Packaging’s workforce is second chance hires, and their turnover rate sits at approximately 13–14%—well below the manufacturing industry average.
• TTTX also attributes low turnover rates to strategic investment in second chance hiring.

More than just filling jobs: Many justice-impacted individuals face barriers like financial, housing and transportation insecurity, which can prevent even the most motivated hires from succeeding at work. Both TTTX and JBM Packaging built their second chance programs to address those challenges.

• TTTX created a carpool program for employees without transportation and provides basic job essentials like steel-toed boots. They also implemented a mentorship system to help new justice-impacted employees acclimate.
• JBM Packaging enrolls new second chance hires in its Better Lives program, a year-long holistic program that includes financial and life coaching, in-house loans, access to a vehicle and wellness resources.
• “We’re not focused on just hiring individuals. We’re focused on building a system—having a comprehensive, holistic approach—making sure that we are setting up these individuals for success, because in the long run, when they’re successful, our organization is going to be successful,” said TTTX Vice President of Administration Leslie Cantu.

A second chance in action: Don Christian is one of the most powerful examples of what second chance hiring can accomplish. After more than 20 years of incarceration, Christian learned of TTTX from his parole officer in 2018 and became one of the first individuals hired through the program. His enthusiasm, dedication and positive impact on the plant floor helped TTTX successfully pilot and continue its second chance program.

• Today, Christian serves as a peer mentor at TTTX, helping new hires navigating similar challenges. He is also enrolled at San Antonio College, pursuing a degree in life coaching and social work with the goal of paying his opportunity forward.
• “I [had] never had a job in my life. I had no experience, but I gave it a shot. When I got [to TTTX], it changed my life. It gave me a chance to reshape my life,” said Christian.
• To other second chance hires, Christian has the following advice: “Now you’re given a second chance. Show them what you got. Show them what you can do.”

Next steps: The MI offers additional second chance hiring resources on its website, including an employer toolkit. The toolkit outlines the five major steps of building and launching a second chance hiring initiative: Plan, Partner, Equip, Implement and Sustain.

• As mentioned above, the MI explores solutions like second chance hiring every month in its Solution Series, which you can sign up for via the MI’s Solutions Center.
• May’s Solution Series event will feature the ins and outs of planning and delivering a successful MFG Day event that will help inspire the next generation of the manufacturing workforce. Learn more and register here.

Michelle Barnhart knows firsthand that disabled workers can thrive in and contribute to manufacturing firms—she is living proof of it.

Not only did manufacturing give her a first shot at a rewarding career as a high school grad, but it gave her another opportunity for success after an injury off the job left her paralyzed.

• “I often say that manufacturing saved me multiple times throughout my life,” Barnhart reflected.

Finding her path: After graduating from high school, Barnhart didn’t see a clear path forward. Through a local unemployment office, she was placed as a second shift contingent worker at a local ink manufacturer.

• What could have been a temporary role quickly became a permanent pathway as she found herself thriving on the shop floor. Over time, she moved up the ranks to become a first shift team lead.

An unforeseen change: Years into her career, Barnhart’s life changed in an instant. An injury in her personal life left her paralyzed and confined to a wheelchair, facing an uncertain future.

• But her company supported her, helping her transition into an order entry and customer service role so she could stay in the industry she loved.

A career shift: But the manufacturing floor kept calling. While searching for a job where her wheelchair was not a barrier to shop floor operations, she found The Timken Company, a global technology leader in engineered bearings and industrial motion.

• Though she started as a floor supervisor at Timken’s Keene, New Hampshire, facility, Barnhart soon switched to a role in human resources, a decision shaped by the support she received from her employer’s HR team after her injury.
• Now in her 10th year at Timken, she serves as HR manager at the company’s Lincolnton, North Carolina, bearing plant.

A recognized leader: Barnhart’s outstanding leadership at Timken earned her recognition as a 2026 STEP Ahead Emerging Leader by the Manufacturing Institute, the NAM’s workforce development and education affiliate.

• The awards honor 145 outstanding leaders in manufacturing, from the shop floor to the C-suite, who are helping the next generation see themselves in modern manufacturing careers.

Leading with inclusion: Barnhart’s leadership at Timken has included establishing the Celebrating Abilities Network, a grassroots employee resource group at Timken that supports individuals with physical and mental disabilities, as well as caregivers, through informational and intersectional programming.

• In 2025, CAN reached more than 475 Timken employees across the U.S.
• “Inclusion drives performance. It really is a pretty simple formula,” said Barnhart. “When people feel valued, when people feel supported, they’re more engaged. When they’re more engaged, they’re more innovative. When they’re more innovative, they’re more committed. And this directly ties back to safety, quality [and] delivery.”

The next generation: A devoted mentor of many younger employees over the years, and one grateful to her own set of guides, Barnhart is going further in supporting the next generation of manufacturing workers by pursuing a Ph.D. at Capella University.

• Her research focuses on the barriers to manufacturing employment for people with physical disabilities from the perspective of frontline supervisors.
• “We’re trying to come up with unique or creative ways to fill [open manufacturing] roles. Certainly we need to be looking into the disability population, as that is one of the higher unemployment rates across the U.S.,” said Barnhart.

The last word: “If you do not see yourself reflected in this industry, that is the exact reason why you need to join. You belong here. We want you here,” said Barnhart. “Give it a chance and see if it can save your life as it did for me two times over now.”

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.