U.S. manufacturing activity expanded for a fourth straight month in April even as the six largest manufacturing industries flagged price increases. The Institute for Supply Management's Purchasing Manager's Index registered 52.7%, unchanged from March, with the broader economy now in its 18th consecutive month of expansion. Readings below 50% indicate contraction.
The S&P Global US Manufacturing PMI showed a slightly stronger pace, climbing to 54.5 from 52.3 in March. Susan Spence, chair of ISM's Manufacturing Business Survey Committee, said on a Friday media call that overall sentiment had dipped slightly, citing concerns about tariffs and the war in Iran.
In the second month of the Iran War, 31% of panelist comments were positive and 69% negative, Spence said in a release. The war was cited in 47% of comments and tariffs in 18%; some panelists referenced both topics in a single comment or in mixed sentiment, mirroring the March pattern.
The New Orders Index rose 0.6 percentage point to 54.1%, marking a fourth straight month of expansion after four months of contraction. The Production Index slipped 1.7 percentage points to 53.4%. Purchasing managers reported lengthening lead times for steel, electronics components and energy-intensive inputs as cost pressures persisted.
The reading follows last week's Federal Reserve decision to hold rates steady while flagging risks to jobs and inflation from the Iran war. The new-orders strength supports the near-term production outlook, but the across-the-board pricing pressure in the six largest manufacturing industries shows cost inflation reaching every link in the supply chain.
Key Takeaways:
1. ISM April PMI held at 52.7%, marking a fourth consecutive month of US manufacturing expansion.
2. The S&P Global US Manufacturing PMI rose to 54.5 from March's 52.3.
3. Iran-war references appeared in 47% of comments; tariffs in 18%, mirroring the March pattern.
4. New Orders Index climbed 0.6 point to 54.1%, the fourth straight month of expansion.
5. All six of the largest manufacturing industries reported price increases, signaling broad-based cost pressure.
