The US manufacturing sector extended its growth streak in April, marking a fourth consecutive month of expansion — but beneath the surface, rising costs and geopolitical tensions are beginning to weigh on sentiment.
According to the Institute for Supply Management (ISM), the Manufacturing PMI held steady at 52.7%, confirming continued expansion. The broader US economy has now been growing for 18 straight months.
A parallel reading from S&P Global placed the PMI even higher at 54.5%, signalling a slightly stronger pace of activity compared to March.
Yet despite this resilience, confidence among manufacturers is showing signs of strain.
“Overall sentiment is down slightly,” noted Susan Spence, chair of ISM’s Manufacturing Business Survey Committee, pointing to ongoing concerns around tariffs and the conflict in Iran.
The data reveals a clear shift in tone: 69% of industry comments were negative, with the Iran war mentioned in nearly half of responses and tariffs cited in 18%. Many respondents referred to both issues simultaneously, highlighting the complexity of the current environment.
Demand indicators remain relatively solid. The New Orders Index rose to 54.1%, marking four consecutive months of growth after a prolonged contraction. However, production slowed slightly, with the Production Index declining to 53.4%.
Supply chains continue to show signs of strain. Supplier delivery times extended for the fifth consecutive month, while inventory levels remained just below expansion territory at 49%.
Employment, however, remains a weak point. The Employment Index dropped to 46.4%, despite a net gain of 15,000 jobs in March, mainly in transportation equipment and fabricated metals.
The most striking development lies in pricing.
The Prices Index surged to its highest level since April 2022, rising by 25.6 percentage points over the past three months. All six major manufacturing industries reported price increases, including chemicals, energy products, machinery, food and electronics.
“Prices are once again the big story,” Spence emphasised, noting that while the Iran conflict contributed to recent increases, inflationary pressures were already building beforehand.
Some companies are accelerating orders to stay ahead of anticipated price hikes linked to tariffs and geopolitical risks. Others report ongoing supply chain disruptions, material shortages and increased volatility in commodity markets.
While a recent US Supreme Court ruling provided some relief by overturning certain tariffs, uncertainty remains high as other trade measures continue to impact business operations.
For now, the US manufacturing sector remains in expansion mode — but momentum is clearly softening.
“We are still growing,” Spence concluded, “but the pace is starting to slow.”
