The Institute for Supply Management released its monthly manufacturing Purchasing Managers Index (PMI) on May 1, reflecting April activity, which revealed a continued overall month-to-month slowdown, driven by lower production and exports. 

The PMI — regarded as a key indicator of U.S. industrial health — was down 0.3 percentage points month-to-month to a reading of 48.7%, following a 1.3-point drop during March. It marked the second straight month that the PMI was in contraction territory (anything below 50.0%). 

The April decline was less severe than the one-point decline forecasted by economists polled by Reuters. 

More granularly, the latest report showed that output lowered considerably, with the PMI’s subindex for production down 4.3 points to 44.0%, while new export orders sunk 6.5 points to 43.1%. Meanwhile, the index for new orders actually increased two points to 47.2%, while prices edged up 0.4 points to 69.8%.  

Of the five subindexes that directly factor into the PMI, two — supplier deliveries and inventories — were in expansion territory — the same as a month earlier, but ISM noted that both conditions figure to be temporary and are driven by tariff concerns. 

Here’s how the overall Manufacturing PMI has looked in bar chart form over the past 12 months: 

source: tradingeconomics.com

Of the 17 manufacturing industries the PMI reflects, 11 reported growth in April, led by Apparel, Leather & Allied Products and Petroleum & Coal Products. The six industries in contraction were led by Wood Products and Furniture. 

PMI Respondent Commentary 

ISM included a selection of commentary from its Manufacturing PMI survey respondents: 

• “Uncertainty over tariffs is providing a big challenge from both Tier-1 suppliers we will have to pay tariffs on directly and Tier-2 suppliers that will try to pass tariffs through to us in the form of price increases and tariff surcharges.” [Chemical Products] 

• “Tariffs impacting operations — specifically, delayed border crossings and duties calculations that are complex and not completely understood. As a result, we are potentially overpaying duties. Unsure of potential drawbacks. Implementation of tariffs and their application is sudden and abrupt. The business is taking countermeasures.” [Transportation Equipment] 

• “Business climate is apprehensive, and with tariff costs implemented, all inbound Chinese shipments are on hold. It is not feasible for our business or customers to sustain the pricing required to provide an acceptable margin.” [Computer & Electronic Products] 

• “The most important topic is tariffs. Risks include margin erosion due to rising operational costs and freight delays disrupting delivery timelines. Supplier relationships are strained by pain-share negotiations, and competitors are gaining share by importing from lower-tariff regions.” [Food, Beverage & Tobacco Products] 

• “Tariff whiplash is causing us major issues with customers. The two issues we are seeing: (1) customers are holding back orders to understand what is happening with tariffs on their products or (2) they are forcing us to accept the tariffs, which causes us to ‘no quote’ the job as we cannot take on that type of risk for an order.” [Machinery] 

• “There is a lot of concern about the inflationary impacts from tariffs in our industry. Domestic producers are charging more for everything because they can.” [Fabricated Metal Products] 

• “Tariff trade wars are incredibly volatile, quickly changing, and disrupting a ton of our current work. We are 90 percent sourced out of China, and the cost models keep changing every week. We are flying to visit suppliers in a few weeks to negotiate current terms and pricing, as well as develop more long-term, strategic plans to reduce risk in the region.” [Apparel, Leather & Allied Products] 

• “Demand is slightly lower than plan, but it has been steady amid tariff concerns. Significant time has been spent quantifying the impact of changing tariff rates. Our costs will increase, and we are discussing how to share that impact across suppliers and customers.” [Electrical Equipment, Appliances & Components] 

• “The recently imposed 145-percent tariff rate on Chinese imports is significantly affecting our 2025 profitability. Due to the complexity of our parts and the lack of alternate sources, we are unable to find any alternate suppliers — especially at a reasonable cost — to our current Chinese sources. Incoming orders have slowed due to market volatility and uncertainty.” [Miscellaneous Manufacturing] 

• “Strategic procurement and the supply chain are paralyzed in a world that changes daily due to tariffs.” [Nonmetallic Mineral Products]