The US industry contracted further in April, while imported products rates pressed supply chains, keeping prices paid for high inputs.
The Institute of Supply Management (ISM) reported on Thursday that its industrial PMI fell to 48.7 last month, compared to 49.0 in March. A PMI below 50 indicates contraction in the manufacturing sector, which represents 10.2% of the US economy. Economists consulted by Reuters predicted that PMI would fall to 48.
The survey covered the announcement of the “Liberation Day” fares of US President Donald Trump, who began comprehensive taxes on most imports from US business partners. This included increasing Chinese products to 145%, triggering a trade war with Beijing.
The manufacturing industry depends strongly on imported raw materials. The second consecutive monthly drop in PMI ended a brief recovery in industry, driven by the hope of a less rigorous regulatory environment on the part of the Trump government and the cuts in interest rates by the Federal Reserve (Fed).
There was no evidence in research that factories continued to anticipate imports last month, although fear of higher prices due to tariffs may have led companies to anticipate orders. A flood of imports weighed on Gross Domestic Product (GDP) in the first quarter.
The subendice of new prospective requests for ISM research has improved to 47.2, after falling to 45.2 in March – lower reading since May 2023.
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Production in factories remained depressed and supplier delivery performance worsened last month. The survey supplier delivery rate increased from 53.5 from March to 55.2 in April. In this case, a reading over 50 indicates slower deliveries.
With the slowdown of deliveries, the measure of the survey of prices paid by the manufacturers for inputs rose to 69.8, the highest level since June 2022, compared to 69.4 in March. This indicated a recovery in product prices that had fallen in March.
The factories continued to cut jobs, although the rhythm decreased. The employment measure in the research industry rose from 44.7 in March to 46.5.
