WASHINGTON (Reuters) -U.S. manufacturing contracted further in April while tariffs on imported goods were straining supply chains, keeping prices paid for inputs elevated.
The Institute for Supply Management (ISM) said on Thursday that its manufacturing PMI dropped to a five-month low of 48.7 last month from 49.0 in March. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.2% of the economy. Economists polled by Reuters had forecast the PMI declining to 48.
The survey covered Trump’s “Liberation Day” tariff announcement, which ushered in sweeping duties on most imports from the United States’ trade partners, including raising duties on Chinese goods to 145%, sparking a trade war with Beijing.
Manufacturing is heavily reliant on imported raw materials. The second straight monthly decline in the PMI ended a brief recovery in manufacturing that had been driven by hopes for a less stringent regulatory environment from the Trump administration and interest rate cuts from the Federal Reserve.
There was no sign in the survey that factories continued to front-run imports last month, though the fear of higher prices from tariffs could have prompted businesses to get in their orders sooner. A flood of imports weighed on gross domestic product in the first quarter.
The ISM survey’s forward-looking new orders sub-index improved to 47.2 after slumping to 45.2 in March, which was the lowest reading since May 2023.
Production at factories remained depressed and suppliers’ delivery performance worsened last month. The survey’s supplier deliveries index increased to 55.2 from 53.5 in March. A reading above 50 indicates slower deliveries.
With deliveries slowing, the survey’s measure of prices paid by manufacturers for inputs edged up to 69.8, the highest level since June 2022, from 69.4 in March. That pointed to a rebound in goods prices, which fell in March.
A measure of imports declined for the first time since December. Factories continued to shed jobs, though the pace slowed. The survey’s measure of manufacturing employment rose to 46.5 from 44.7 in March.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
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