The Institute for Supply Management's Manufacturing Purchasing Managers' Index fell to 48.7 in April from 49.6 in March, the third consecutive monthly decline and the lowest reading since November. A reading below 50 indicates contraction in the factory sector, and the April print marks the 18th month of the past 24 in which the manufacturing PMI has signaled outright contraction.
The breakdown of the report was uniformly soft. The new orders index fell to 47.2, the lowest in five months. Production fell to 48.9, employment fell to 47.4 — its weakest reading in over a year — and supplier deliveries slowed to 50.1, indicating only marginally faster delivery times. Inventories edged up to 49.1, suggesting that the sector is not yet aggressively destocking but is also clearly not building inventory in anticipation of stronger demand.
Prices paid, however, jumped to 56.3 from 54.1 — the highest since June 2022. The combination of weakening demand and rising input costs is the worst possible mix for factory operators and is reminiscent of mid-1980s dynamics. Survey respondents pointed to tariff-related price increases on imported components, particularly from China and Mexico, as well as higher costs for steel, aluminum, and select chemicals.
By industry, only six of the 18 manufacturing sectors tracked by ISM reported growth: petroleum and coal products, miscellaneous manufacturing, food and beverage, transportation equipment, computer and electronics, and primary metals. Twelve sectors reported contraction, led by furniture, paper products, machinery, fabricated metals, and electrical equipment.
The geographic pattern continues to disadvantage the industrial Midwest. Survey responses from Ohio, Michigan, Indiana, and Wisconsin were notably weaker than from the South and West, a trend that has held throughout the recent manufacturing slowdown. Auto production has been a particular drag, with major OEMs cutting Q2 and Q3 build schedules in response to softer dealer demand.
The ISM print is consistent with other manufacturing indicators. The S&P Global U.S. Manufacturing PMI was 50.2 — barely in expansion — and regional Fed surveys from Philadelphia, New York, and Dallas all softened in April. Industrial production data from the Federal Reserve, due May 16, is expected to show a small decline.
Manufacturing employs roughly 13 million Americans — about 8% of the nonfarm workforce — and has shed jobs in three of the past four months. Hiring has been weakest in durable goods, particularly motor vehicles, machinery, and fabricated metals. Layoff announcements from companies like Stellantis, Caterpillar, and 3M have added to the pressure.
The longer-term outlook remains tied to the path of interest rates and the global trade environment. Capital goods orders ex-aircraft and ex-defense — a leading indicator of business investment — have been roughly flat for over a year. A meaningful pickup will likely require both lower borrowing costs and clarity on tariff policy. For workers in the sector, the near-term backdrop is one of stable but slow employment, with the most resilient subsectors being aerospace, defense, and semiconductor-adjacent manufacturing.