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.