U.S. ISM Manufacturing Index (April 2025)
Vikram Rai, Senior Economist | 416-923-1692
Date Published: May 1, 2025
- Category:
- U.S.
- Data Commentary
- Commodities & Industry
The ISM manufacturing index contracted in April, marking two consecutive months of decline
- The ISM Manufacturing Index declined slightly in April, to 48.7 from 49.0 in March.
- Eleven of 18 industries reported growth for the month, up from nine in February. In another sign of slowing momentum, 41% of manufacturing GDP contracted in April, comparable to the 46% in March.
- Demand conditions continued to be weak. The new orders index improved marginally but remains in contractionary territory (47.2, 45.2 in March), and new export order growth declined sharply further into contraction (43.1 vs 49.6 in March). The backlog of orders also shrank at a faster pace than in March (43.7 vs 44.5) and imports slid into contractionary territory.
- Like new export orders, the production index tumbled further into contraction, falling to 44.0 from 48.3. This marks the second month in a row where the production index and the backlog of orders have both been in contractionary territory. Employment contracted at a slower pace than in March, ticking up to 46.5.
- Price gains held steady at a high level after having accelerated in April, coming in at 69.8, compared to 69.4 in March (and 62.4 in February). The prices index is again at its highest level since June 2022.
Key Implications
- Respondents are indicating there is disruption to their operations from tariffs, both in the form of rising costs, delays in border crossings, and a lack of clarity on exactly what duties are owed. While last month it seemed that we were heading toward a significant inventory build to get ahead of tariffs, it seems that now tariffs are in place, the build in inventories has slowed, and is mirrored in lower production and lower demand.
- We are only one short month into the current tariff environment, and it remains uncertain how long these tariffs will be in place. Notably, the 145 percent tariffs on China were cited as disruptive, paralyzing, and inflationary. But for all that has changed, this month's report was very similar to last month's. The big difference is that we are seeing weak demand and price pressures now accompanied by evidence of production declines – in other words, the manufacturing sector is experiencing stagflation.
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