Economic activity in the U.S. manufacturing sector contracted for a second consecutive month in April, according to the latest Manufacturing ISM Report on Business released Thursday by the Institute for Supply Management.
The Manufacturing Purchasing Managers’ Index (PMI) registered 48.7%, down from 49% in March. A reading below 50% indicates contraction. The April figure reflects weakening demand, declining production, and continued employment cutbacks across much of the sector.
“U.S. manufacturing activity slipped marginally further into contraction after expanding only briefly earlier this year,” said Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee. “Demand and output weakened while input conditions strengthened — not a favorable combination for economic growth.”
Key indicators also pointed to sustained challenges. The New Orders Index remained in contraction at 47.2%, though slightly improved from March. Production dropped to 44%, a 4.3-point decline. The Employment Index rose slightly to 46.5% but stayed in negative territory as companies continued layoffs.
The report cited slowing new export orders and contracting backlogs as signs of softening demand. Meanwhile, raw material inventories grew — a response ISM attributed to companies accelerating deliveries ahead of new tariffs, not to increased demand. Supplier deliveries slowed, and prices for materials such as steel and aluminum continued to rise, driven in part by new tariffs.
Only four of the six largest manufacturing industries reported growth: petroleum and coal products, computer and electronic products, machinery, and chemical products.
Among 18 manufacturing sectors, 11 reported growth, while six, including transportation equipment, furniture, and food products, showed contraction.
The manufacturing slowdown comes amid growing trade tensions and market uncertainty, with business leaders expressing concern about rising costs, delivery delays, and weakened buyer confidence linked to volatile tariff policies.
Despite the contraction in manufacturing, the overall U.S. economy expanded in April for the 60th consecutive month, ISM noted. The April PMI reading corresponds to an estimated annualized increase of 1.8% in real gross domestic product.
The next Manufacturing ISM Report on Business will be released on June 2, 2025.
