Manufacturing output increased in April, marking the fourth consecutive month of annual growth, according to the latest edition of the Manufacturing Report on Business issued today by the Institute for Supply Management (ISM).
The report’s benchmark reading, the PMI, came in at 52.7 in April (a reading above 50 indicates growth), matching March’s level and signaling expansion at the same pace for the fourth straight month. January and February posted readings of 52.6 and 52.4, respectively, with January representing the first positive PMI reading since February 2025’s 50.0. ISM noted that the overall economy expanded at the same pace for the 18th consecutive month.
The April PMI was 2.8 percentage points above the 12-month average of 49.9. Over that period, the high and low readings were 52.7 (March) and 47.9 (December), respectively.
ISM reported that 13 manufacturing sectors expanded in April, including Textile Mills; Nonmetallic Mineral Products; Primary Metals; Plastics & Rubber Products; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Electrical Equipment, Appliances & Components; Paper Products; Fabricated Metal Products; Computer & Electronic Products; Chemical Products; and Furniture & Related Products. Sectors reporting contraction included Wood Products; Petroleum & Coal Products; and Food, Beverage & Tobacco Products.
ISM cited the following key metrics for April:
- New Orders: 54.1, up 0.6 percentage points, growing at a faster pace for the fourth consecutive month, with 12 sectors reporting growth;
- Production: 53.4, down 1.7 points, growing at a slower rate for the sixth consecutive month, with 11 sectors reporting growth;
- Employment: 46.4, down 2.3 points, contracting at a faster rate for the 31st consecutive month and declining in 39 of the last 40 months, with five sectors reporting growth;
- Supplier Deliveries: 60.6 (readings above 50 indicate slower deliveries), up 1.7 points, with 14 sectors reporting slower deliveries;
- Inventories: 49.0, up 1.9 points, contracting at a slower rate for the 12th consecutive month, with five sectors reporting higher inventories;
- Customers’ Inventories: 39.1, down 1.0 point, remaining too low at a faster rate for the 19th consecutive month, with one sector reporting higher inventories; and
- Prices: 84.6, up 6.3 points, increasing at a faster rate for the 19th consecutive month, with 17 sectors reporting higher prices. This marks the highest reading since April 2022, when it also reached 84.6.
Economic conditions, tariffs, and the ongoing Iran conflict were among the main themes cited in panelists’ comments.
“Demand for manufactured goods is trending higher versus last year; however, geopolitical uncertainty and rising oil and diesel prices continue to weigh on demand,” said a Transportation Equipment panelist. “Many customers are exercising caution and remain in a wait-and-see mode.”
The panelist added that ongoing tariffs on products used in the company’s lines are being closely monitored, with efforts underway to mitigate risk. Geopolitical concerns—particularly in the Middle East and their impact on commodity and energy markets—also remain under review.
“Supply chain risks include increased costs and longer transit times for rerouted shipments due to conflict in the Red Sea, Strait of Hormuz, and Suez Canal,” the panelist said. “These conditions are being monitored, and rerouting measures have been implemented where possible.”
In an interview with LM, Susan Spence, Chair of ISM’s Manufacturing Business Survey Committee, said April’s 52.7 PMI reading offered some relief, given that the Iran conflict has been ongoing for more than 60 days.
“I had expected it to be a bit worse,” she said. “The New Orders Index had seen sequential declines in recent months, so even a modest uptick is encouraging. Is that due to very low Customers’ Inventories? Possibly. But demand sentiment is slightly improved, with a 1.6-to-1 ratio of respondents seeing increased demand versus those who are not—up from March.”
While the PMI remains in expansion territory, Spence noted that Employment continues to lag, with limited hiring activity and increasing mentions of layoffs across the sector.
She added that several additional factors warrant close attention.
“Tariff uncertainty may have eased somewhat, even though new or replacement tariffs are likely, and there has been a sharp and credible spike in Prices,” she said. “There is also the Iran conflict, along with growing frustration among some nations that view the U.S. as a less friendly place to do business.”
Looking ahead, Spence said demand sentiment appears to be improving, based on panelist comments, as references to tariffs have somewhat diminished.
“I don’t think that reflects fatigue in talking about tariffs,” she said. “Rather, conditions have improved since the February Supreme Court ruling, with less unpredictability than before.”
Assessing manufacturing performance through the first four months of 2026, Spence said January’s return to expansion validated panelists’ earlier expectations, with further gains in the months that followed.
However, rising prices remain a wildcard, raising the question of how much further increases can go before they begin to dampen momentum.
“If we’re in mid-summer and there’s still no end in sight to this conflict, I wouldn’t expect employment to improve in manufacturing sectors that produce for consumers,” she said. “Ultimately, everyone is a consumer—whether directly or through business demand. If prices rise 25% or more, people will start making tough choices. Not everyone can absorb those increases or maintain discretionary spending, such as travel. That may be out of reach for some time. And we also have midterm elections approaching.”
