Input Stories

The S&P Global U.S. Manufacturing PMI was 50.2 in April, the same as March, signaling marginal growth. Production declined for a second month in a row but at a slower pace than the prior month. Supported by domestic demand, new orders grew for the fourth month in a row, but at the lowest rate this year, dragged down by declines in new export orders. Additionally, optimism fell to its lowest reading since June, and employment fell for the first time in six months.

Tariffs led to steep increases in both input and output costs, with output costs rising at the fastest pace in more than two years. Input prices rose at a slightly slower pace than in March, when prices rose at the highest rate since August 2022. Although some firms reported beneficial tariff-related switching to domestic suppliers to avoid import tariffs, any sales increase was countered by tariff-related worries over supply chains and lost export sales.

Additionally, tariffs are leading to supply-side disruptions, with the seventh straight month of lengthening lead times and the second consecutive month of reduced stocks of purchases. Meanwhile, stocks of finished goods declined at the greatest rate this year and for the fifth consecutive month, likely due to firms modifying their sales forecasts and inventories downward. Firms are also adjusting employment plans, which fell for the first time since October, by choosing not to fill open positions.

In April, the global manufacturing activity contracted after three consecutive months of growth, falling to 49.8 from 50.3. Three of the five PMI components—new orders, employment and stocks of purchases—signaled contraction. While output and delivery times improved, global trade conditions worsened and optimism slumped to a two-and-a-half-year low. Companies cited concerns about tariffs and protectionism impacting new orders, supply chains and pricing.

India, Greece and the Philippines had the highest PMI readings in April, while the Eurozone and China’s PMI also registered expansions. On the other hand, Japan and the U.S. were two of the larger nations to record contractions, while the U.K. showed the steepest decline. New orders fell for the first time this year, with new export orders suffering its steepest decrease since August 2023. Of the 28 nations included in the report, all but three—Germany, India and Greece—showed declines in new export orders. Output rose slightly in both the consumer and intermediate goods industries but was unchanged for investment goods producers.

Additionally, manufacturing employment fell for the ninth consecutive month in April and at the fastest rate since January. Staffing levels sank notably in China, the U.S., the Eurozone and the U.K. These cuts stemmed from a higher cost environment, as both input and output prices increased, with output prices hitting a 25-month high.

Job openings for manufacturing ticked up by 4,000, from 445,000 in February to 449,000 in March. However, the February job openings level of 445,000 was revised downward dramatically from 482,000 in the previous report. Durable goods job openings in March stayed the same at 313,000, while nondurable goods job openings increased by 5,000, from 131,000 in February to 136,000 in March. The manufacturing job openings rate stayed the same at 3.4% in March and decreased from 3.8% the previous year. The rate for durable goods manufacturing similarly stayed the same at 3.8%, while it ticked up 0.1% to 2.7% for nondurable goods.

In the larger economy, the number of job openings fell to 7.2 million, a decrease of 288,000 from the previous month and 901,000 from the previous year. The job openings rate declined to 4.3%, down from 4.5% in February and from 4.9% last year. This data reflects an overall labor market that has eased back to pre-pandemic levels, but remains relatively tight from a historical perspective.

The number of hires in the overall economy increased 41,000 to 5.4 million in March but dropped 61,000 from the previous year. The hires rate for the overall economy stayed the same in March at 3.4%. Meanwhile, the hires rate for manufacturing stayed the same at 2.5% from February. The hires rate for durable goods edged down 0.1% to 2.3%, but ticked up 0.2% to 2.8% for nondurable goods.

In the larger economy, total separations, which include quits, layoffs, discharges and other separations, fell 179,000 from February to 5.1 million and dropped 131,000 from the previous year. The total separations rate edged down 0.1% to 3.2% for the overall economy and also ticked down 0.1% for manufacturing to 2.4%. Within that rate, layoffs and discharges declined by 15,000 in March for manufacturing, while quits increased by 4,000. The quit and layoff rates continue to remain lower for manufacturing than the total nonfarm sector.

Nonfarm payroll employment increased by 177,000 in April, above expectations. On the other hand, March’s job gain was revised downward dramatically by 43,000, from 228,000 to 185,000. The 12-month average stands at 156,833 job gains per month. The unemployment rate stayed the same at 4.2%, while the labor force participation rate inched up 0.1% to 62.6%.

Manufacturing employment slipped by 1,000, but the March gain of 1,000 was revised upward by 2,000 jobs to an increase of 3,000. Durable goods manufacturing employment rose by 2,000, while nondurable goods employment declined by 3,000. The most significant gains in manufacturing in April occurred in fabricated metal product manufacturing and food manufacturing, which added 3,100 jobs each over the month. Meanwhile, the most significant losses occurred in motor vehicles and parts manufacturing, which shed 4,700 jobs over the month, followed by computer and electronic product manufacturing, which lost 4,000 jobs.

The employment-population ratio ticked up 0.1% to 60.0% but is down 0.2 percentage points from a year ago. Employed persons who are part-time workers for economic reasons decreased by 90,000 to 4.69 million but are up from 4.46 million in April 2024. Native-born employment is up 1,042,000 over the month and 1,120,000 over the year. Meanwhile, foreign-born employment is down 410,000 over the month but up 1,333,000 over the year.

Average hourly earnings for all private nonfarm payroll employees rose 0.2%, or 6 cents, reaching $36.06. Over the past year, earnings have grown 3.8%. The average workweek for all employees stayed the same at 34.3 hours but ticked down 0.2 hour for manufacturing employees to 40.0 hours.

In April, the U.S. manufacturing sector contracted for the second consecutive month and at a slightly faster pace than the prior month, with the ISM Manufacturing^® PMI decreasing to 48.7% from 49.0% in March. Customer demand and output weakened, while input strengthened further, which are not seen as positive conditions for economic growth. The New Orders and Employment Indexes continued to contract but at a slower pace, rising to 47.2% and 46.5%, respectively. Production contracted at a faster pace, weakening to 44.0%, 4.3 percentage points lower than March. Meanwhile, inventories (50.8%) grew at a slower pace in April, which is not a positive sign amid slowing demand.

The New Orders Index contracted for the third consecutive month but at a slower pace than the prior month, a 2.0 percentage point rise from March. The index hasn’t shown consistent growth since a 24-month streak of expansion ended in May 2022. Of the six largest manufacturing sectors, four—petroleum and coal products; machinery; computer and electronic products; and chemical products—reported an increase in new orders. The percentage of respondents noting “higher” and “lower” new orders both rose in April, an unusual sign and indication of a period of transition.

The New Export Orders Index contracted for a second consecutive month and at a faster pace since the pandemic to 43.1%, 6.5 percentage points lower than March. The sharp contraction was due to the combination of slower global growth as well as the application of retaliatory tariffs applied to a variety of U.S.-manufactured products. Meanwhile, the Imports Index contracted after three consecutive months of expansion, dropping 3.0 percentage points to 47.1% in April. Unlike in prior months, buyers were no longer pulling forward deliveries as increased tariff rates went into effect, and lower demand reduced the need to maintain the import levels of prior months.

The Employment Index contracted for the third consecutive month but at a slower pace than the prior month, a 1.8 percentage point bump from March. Of the six-largest manufacturing sectors, three—petroleum and coal products; transportation equipment; and computer and electronic products—reported increased employment. Companies continued to reduce headcounts through layoffs, attrition and hiring freezes.

The Prices Index rose 0.4 percentage points to 69.8%, indicating raw materials prices increased for the seventh straight month in April to its highest reading since June 2022, driven by the dramatic rise in steel and aluminum prices, as well as the broad 10% tariff applied to imported goods. Forty-nine percent of companies reported paying higher prices, up dramatically from 21% in January.

The first brand-new U.S. liquefied natural gas export facility to advance under the new administration has gotten the final financial green light (Reuters, subscription).

What’s going on: “Australia’s Woodside Energy gave final approval to build a $17.5 billion liquefied natural gas project in Louisiana.”

•  The project—estimated to begin delivering gas in 2029—will be the largest single from-scratch investment in Louisiana to date, as well as the largest single foreign direct investment in the state’s history, according to Louisiana Economic Development.

What the project has: The Woodside LNG endeavor is “in a foreign trade zone, which gives it relief on some customs duties.”

• The construction will use mostly U.S.-based contractors, services and workers, and about half of the materials and equipment will be sourced domestically.

What it means: The project, which has an estimated lifespan of 40 years once operational, will help Woodside “produce around 24 million tonnes per annum from its worldwide LNG portfolio in the next decade, making up over 5% of global supply, to service demand in Europe and Asia.”

The NAM says: “Tremendous news from [Woodside Energy],” NAM President and CEO Jay Timmons wrote following the announcement. “Growing LNG production is vital for fostering job creation, incentivizing investment and driving America’s economy forward.”

The NAM’s record: The NAM has long urged policymakers to supercharge the nation’s LNG export capacity. In 2024, it released a joint study with EY that found the LNG export industry’s total fiscal support of federal, state and local governments was $11 billion in 2023 alone.

• The study also found that the sector, which has created tens of thousands of jobs, could support more than 900,000 additional positions and add $216 billion to U.S. gross domestic product by 2044.
• Last December, the NAM made recommendations to Trump’s transition team, advocating the removal of the Biden export ban, a move that Trump made on his first day.
• In April, the NAM recommended to 10 federal agencies that 44 regulations should be revised or rescinded. Among those proposals was the recommendation that the Department of Energy issue a new study on LNG exports.

Existing home sales decreased 5.9% in March and 2.4% from March 2024. Housing inventory grew to 1.33 million units, reflecting an 8.1% rise from February and a 19.8% jump from last year. The median existing home price was $403,700, up 2.7% from last year, with all four U.S. regions reporting price increases.

Single-family home sales fell 6.4% in March, with the median price increasing 2.9% from March 2024 to $408,000. Condo and co-op sales stayed the same at 380,000 units in March but were down 5.0% from last year. Meanwhile, the median price rose 1.5% from the prior year to $363,000.

Homes were typically on the market for 36 days in March, down from 42 days in February but up from 33 days in March 2024. First-time buyers made up 32% of sales in March, up slightly from 31% in February and the same as last year. According to NAR’s Profile of Home Buyers and Sellers, 2024 had the lowest share of first-time home buyers on record at 24%.

All-cash sales accounted for 26% of transactions in March, down from 32% in February and 28% in March 2024. Meanwhile, investors or second-home buyers represented 15% of homes purchased in March, down from 16% in February and unchanged from March 2024. Distressed sales, including foreclosures and short sales, represented 3% of purchases in March, unchanged from February but up from 2% last year.

The S&P Global Flash U.S. Manufacturing PMI rose from 50.2 in March to 50.7 in April, a two-month high and above the 50-point marker that signals growth in business conditions. Factory production edged back into growth after declining last month. New orders also rose at an increased rate, due to higher domestic orders. Meanwhile, falling export sales were linked widely to new tariffs. The Flash PMI is based on 85% of survey responses for the monthly PMI survey, so although not final, it can give an indication of where activity is trending.

Overall business activity slowed to a 16-month low in April. The average price for goods and services in manufacturing rose to a 29-month high, as suppliers navigate tariff-based price hikes and a weakened exchange rate. Manufacturing employment also declined for the first time since October. Meanwhile, optimism about future business conditions fell for the third month in a row and to the lowest point since July 2022. Sentiment was more resilient for manufacturing than in services, with some companies reporting optimism about protectionist trade policies. Nonetheless, factory confidence fell to its lowest point since last August amid rising costs, supply challenges, weak economic growth and lower export demand.

Manufacturing activity in the Fifth District slowed further in April. The composite manufacturing index fell from -4 in March to -13 in April. Manufacturers continue to be less optimistic looking ahead, with the outlook for future local business conditions falling from -22 in March to -37 in April. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments and new orders fell markedly from -7 to -17 and from -4 to -15, respectively. Employment declined from -1 to -5, indicating hiring decreased further in April. The vendor lead time index dropped from 12 to 1 in April, while the share of firms reporting backlogs fell from -1 to -24. Companies are further depressed about local business conditions, with the index declining from -13 to -21. The average growth rates of prices paid and received increased.

Looking ahead, firms still expect both price indexes to rise in the next 12 months. Expectations for future shipments and new orders both declined considerably and turned negative, suggesting that firms anticipate significant deterioration in these areas over the next six months. Expectations for backlogs fell, moving from -6 to -30. Meanwhile, firms exhibited a more cautious approach to equipment and software spending, with expectations slipping from -8 to -16. Similarly, expectations for spending on capital expenditures edged down from -2 to -15. In sum, businesses in the Fifth District are much more hesitant about the prospects for future growth and making new investments.

Manufacturing activity fell modestly in the Tenth District in April, with the month-over-month composite index down two points to -4. Meanwhile, expectations for future activity declined slightly but remained positive. 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 month-over-month decrease in activity continued to be due primarily to declines in nondurable manufacturing, specifically food and print manufacturing. Most month-over-month indexes were negative, apart from prices, supplier delivery times and inventories for finished goods. Written responses highlight significant price pressure from tariffs, with respondents expecting potential layoffs and price increases for consumers.

Production fell six points to -5, while new orders inched up from -12 to -11. Employment declined at a faster rate in April, falling from -4 to -11, while the average employee workweek turned negative, decreasing from 6 to -6. The backlog of orders worsened from -6 to -20. The year-over-year composite index for factory activity dipped from -7 to -8. Prices received increased both month-over-month and year-over-year in April, while prices for raw materials rose year-over-year in April but were unchanged month-over-month.

In April, survey respondents were asked about business uncertainty and demand expectations. An overwhelming majority of respondents, about 86%, said there was more uncertainty than at the beginning of the year, with nearly 45% saying there was much more uncertainty. Just 11% reported no change, while roughly 2% said there was less uncertainty. When asked about demand expectations, 18% of firms said that demand was significantly lower, and 35% said that expectations were only slightly lower. Meanwhile, 23% said demand was unchanged, and 23% reported slightly higher demand.