Prices are rising but orders slowing. Production has collapsed.
Please consider the April 2025 Manufacturing ISM® Report On Business® by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management®.
The U.S. manufacturing sector contracted in April for the second consecutive month after two months of expansion preceded by 26 months of contraction. The Manufacturing PMI® registered 48.7 percent, 0.3 percentage point lower compared to the 49 percent reported in March. “After reversing its recent momentum in March, the Manufacturing PMI® again registered below its reading in December. Of the five subindexes that directly factor into the Manufacturing PMI®, two (Supplier Deliveries and Inventories) were in expansion territory, the same as last month. Slower supplier deliveries and slightly expanded inventories in April are not considered positives for the economy: Both conditions figure to be temporary and are driven by tariff concerns, either delaying buyer/seller negotiations or advancing material deliveries that will be reversed after tariffs are deployed, leading to a drawdown of manufacturing inventory. Although the Employment and New Orders indexes recovered somewhat, they remained in contraction.
Of the six biggest manufacturing industries, four (Petroleum & Coal Products; Computer & Electronic Products; Machinery; and Chemical Products) registered growth. A reading above 50 percent indicates that the manufacturing sector is generally expanding; below 50 percent indicates that it is generally contracting.
“Demand and production retreated and destaffing continued, as panelists’ companies responded to an unknown economic environment. Prices growth accelerated slightly due to tariffs, causing new order placement backlogs, supplier delivery slowdowns and manufacturing inventory growth. Forty-one percent of manufacturing gross domestic product (GDP) contracted in April, down from 46 percent in March. The share of manufacturing sector GDP registering a composite PMI® calculation at or below 45 percent (a good barometer of overall manufacturing weakness) was 18 percent in April, an 11-percentage point increase compared to the 7 percent reported in March. Of the six largest manufacturing industries, four (Petroleum & Coal Products; Computer & Electronic Products; Machinery; and Chemical Products) expanded in April, one more as compared to March,” says Fiore.
Prices
The ISM® Prices Index registered 69.8 percent in April, increasing 0.4 percentage point compared to the March reading of 69.4 percent, indicating raw materials prices increased for the seventh straight month after a decrease in September. The Prices Index has increased 15 percentage points over the past six months to record its highest reading since June 2022 (78.5 percent). Of the six largest manufacturing industries, five — Machinery; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Transportation Equipment — reported price increases in April. “The Prices Index indicated increasing prices in April for the seventh consecutive month, driven by increases in steel and aluminum prices impacting the entire value chain, as well as the general 10-percent tariff applied to many imported goods. Forty-nine percent of companies reported higher prices in April, compared to 46 percent in March. This share has consistently increased over the past six months, from a low of 12.2 percent in November,” says Fiore. A Prices Index above 52.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.
In April, the 15 industries that reported paying increased prices for raw materials, in order, are: Textile Mills; Furniture & Related Products; Nonmetallic Mineral Products; Machinery; Miscellaneous Manufacturing; Fabricated Metal Products; Chemical Products; Food, Beverage & Tobacco Products; Primary Metals; Paper Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Wood Products; and Plastics & Rubber Products. No industries reported paying decreased prices for raw materials in April.
What Respondents Are Saying
- “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]
Related Posts
April 30, 2025: Real GDP Down 0.3 Percent, Real Final Sales Down 2.5 Percent, Inventories Soar
Front-running tariffs led to a collapse in real final sales, the bottom-line estimate of GDP
May 1, 2025: First-Quarter 2025 GDP, the Good, the Bad, and the Ugly
Here’s a more detailed look at GDP for the first quarter.
April 30, 2025: ADP Employment Report Much Weaker than Expect, Large Employment Stalls
Economists expected 125,000 jobs. ADP reported 62,000 with negative revisions.
smells like stagflation is brewing in economy, with a schizo as potus who is inflicting suicide on the empire. what could go wrong?
Secular stagnation is simply the impoundment of monetary savings in the payment’s system. To reiterate, banks don’t lend deposits. An increase in bank-held time deposits shrinks aggregate demand, shrinks GDP. Dr. Philip George proved this.
All Trump needs to do is drop FDIC deposit insurance back to $100,000.
–Danielle Dimartino Booth’s book: “Fed Up”, pg. 218
“Before the financial crisis, accounts were insured up to the first $100,000 by the FDIC. That limit kept enormous sums in the shadow banking system.
But savings flowing through the nonbanks never leaves the payment’s system.
Goldman GS @556 is #1 in the Dow. MSFT@431 is #2. UnitedHealth @401 is #3.
Breaking News: Trump threatens any country buying Iranian oil with sanctions.
https://www.cnbc.com/2025/05/01/trump-iran-oil-sanctions.html
So much for making deals.
I believe I predicted this a few posts ago.
color me ignorant but is not the worlds oil somewhat in the “same pot”?
Not in illogical incoherent Trumpland.
Not if you can keep people from drinking from the same pot. They have to go without.
Carrots if Iran makes a deal. The stick: isolate Iran. If China or Turkey or any other country buy oil from Iran they can’t do business with the US.
After the blast in Iran the talks were cancelled.
Breaking News: Microsoft raising prices of XBOX due to ‘market conditions’
https://www.cnbc.com/2025/05/01/microsoft-raises-prices-of-xbox-video-game-consoles-and-controllers.html
Those renters, blacks and latinos are gonna be livid.
Winning! /s
Are blacks and Latinos big gamers? You seem to know the gamer culture.
Go watch any Youtube gamer channel and you’ll find the answer. some people don’t have the bigbucks like you Doug to hang around in France. Their escape is primarily through a gaming console.
I am not a gamer. My hand-eye coordination sucks so I never got into it. The gamer-age children of big bucks people around me are more into horses than games. They are at at all the time and love training them to jump and steeple chase. Would you rather play a game or ride a horse after school?
After Superman broke his neck on a horse, I’d rather play video games. I can visit infinite worlds as a space hero or ancient warrior or sorcerer.
You are certainly not the adventurous type of person then. Rather risk adverse and seeks safely above all I would say. You are attracted to imagining yourself doing things instead of actually doing them. Why do you find that satisfying?
ok boomer
Wow, that’s a very racist and ignorant comment.
I asked Google about “xbox buyer demographics” and got this:
“Xbox buyers generally fall into the 18-34 age range, with a higher proportion of males compared to females. The majority of Xbox owners are white, followed by African Americans and Hispanics. The typical household income for Xbox owners is around $75,000.”
and
“A large portion of Xbox owners live with a spouse or partner, indicating a more established demographic.”
Replace them with ice boxes. It’s the green thing.
Good. Maybe this will encourage kids to go outside more and adult men living in their parents’ basements to get a life.
Tariffs for 30 months! Uh no, wait a second.
Companies are convinced that the tariffs will stay on. Perhaps not as high as they are now but that they will stay at a level where it makes business sense to manufacture in the US. That was the intended message and it have been received and understood. Counting on a Democrat win in the future looks to be a risky bet for them because they in all probability will keep them on as did Biden.
Lol! That’s hilarious!
Companies have NO IDEA whether tariffs will stay on or not. Which is why they keep withdrawing future guidance. And how could they know?
Since Trump doesn’t know either. After all, he changes his mind every day based on who can manage to get to speak to him.
Tech execs, auto execs, retail, wall street execs, bankers etc keep making the pilgrimage to the WH to try to get Trump to change his mind. And he does. Sometimes. Partially.
Or markets get jittery and so does Trump.
I hope he keeps as many tariffs on as long as possible, so we can see the results.
trump only cares about one thing. being center of world attention. the topic or results concern him zero. he’s been this way his entire life including when he was booted out of his private school by his own father.he’s really a great reflection of the modern amerikan empire. we are an empire that televised the past few wars bombings live…… since the first gulf war…..the people only care about celebrities like the 14 year apprentice businessman.
Trump says he is using tariffs to bring back manufacturing jobs, but the real goal is to decrease or eliminate the income tax.
Before we had an income tax, tariffs brought in 60-90% of federal revenue. Trump’s administration naively thinks tariffs will bring in a similar percentage.
They won’t, so the next solution will be a national value added tax to replace the income tax.
To eliminate the income tax, you would want to revoke the 16th amendment, the one that allows the imposition of the tax. If not, some future Congress and President would undoubtedly bring back the income tax on top of the VAT. An alternative to the VAT is the FAIR TAX. Look it up. Either way, repealing an amendment is a tough row to hoe, but it can be done.
The federal govt spends $7 trillion per year, collects $5 trillion (half from income tax), and borrows $2 trillion.
You seem to think that $200 billion in tariffs will eliminate $2 trillion in borrowing AND eliminate $2.5 trillion in income taxes.
Your math doesn’t add up.
pre ww2 the Gov was such a small percent of GDP. under 5%. it is a different world today. nobody starves here, unless mentally ill or drugged out……..
Yes. Many things have changed dramatically since before WW2.
But we must deal with the world as it is. Not as it was in the 1930s.
I think the trade war would have better optics, and more support, if it were presented to the American public properly, which right now the current administration is not.
A trade war is exactly what it says it is, it’s a war. It’s a soft war and the soldiers are the general public, all of us. The battle ground is store shelves and paychecks, so it’s a very personal and close to home battle.
In a war, hard decisions and sacrifices are made. Rising prices and empty stores shelves are the collateral damage we will all be facing soon, likely quite noticeable around back to school season late this summer. Other countries will suffer in their own ways depending on what they are dependent on.
So why have a trade war? I suppose the reasons are hard for most people in the under 75 y.o. crowd to swallow, obviously self included. We have lived all our lives in generally good times. There are always struggles but looking down from the 30,000 foot level, the luxuries and fun of our modern lives have been the best mankind has ever seen. BUT…is it all sustainable? These are the questions few in the mainstream media ask or educate people on.
In 2025, we are reaping the spoils of a number of major events in our favor. Winning the cold war, inventing the internet, outsourcing products for cheap prices, and printing $37 trillion in debt to live beyond our means and cover up the hard times that never much came to fruition.
So what does it all mean? It means one way or another things in our lives are changing and will continue to change, trade war or not. The high national debt model since 2001 has had many side effects, financializing everything and creating sort of a long slow decline with a growing chasm of haves and have nots. Some people prefer that method but is that what America is supposed to be about? Is that the middle class dream?
I think if the trade war were presented in a much more patriotic fashion, with facts on the timeline, the struggles, and what people need to do to win it, that would give it a much better chance vs the current blackout of info except divided media and falling stock prices.
Americas issues are 40+ years in the making, they won’t be solved in a year. If we start manufacturing again, it takes time to build and staff these places. The employees will require decent wages, which the free market will set based on number of applicants.
None of this will lower prices, it will raise them but the theory of larger paychecks will offset the pain of increases.
It is important to know that for our long term benefit, something has to be done other than rely on China for so much. I never understood our relationship with them, they are a bad country of thieves that think capitalism is a blip on the radar of their 2000 year dynasty. They don’t like us but we developed codependency that i assume the history books will say was a large part of someone’s downfall.
I don’t know if a trade war is the answer but the one fact that remains is that if America wants another 100 years of prosperity, printing money and outsourcing labor isn’t going to generate it.
Peeps made trillions on labor arb, Chairman Mao was always happy to oblige while forcing tech transfer, ownership and stealing IP. Gee, but if we’re making so much money, who cares?
What an amazing synopsis. Boomers had it great and now it’s time for everyone else to tighten their belts and suffer….Lol. And in a country where being asked to wear a mask nearly caused a civil war, the population will now willingly go without major goods and services for the good of the people….double Lol.
I have an alternative take: smart people with money will bail on the Trumptanic and move elsewhere and live the same high standard of life boomers got to live. Don’t ask me where I’m going cuz I’m not telling!
By the way, most countries around the world wont take senior citizens so it’s time to reap what you sow.
It’s tariff turtles all the way down and inflation all the way up!
I had no intention of knocking boomers or anyone, it’s pure mathematics.
The fact remains the United States of Visa has run the bill too high and has to make decisions. There is no way to eliminate all pain, but can be mitigated and reversed with a long term plan.
Most people don’t just bail like you want to.
Well lead the way, call for the elimination of social security and medicare, EVERYONE has to suffer a little bit to do our part to save America.
I solemnly promise that if SS & medicare is eliminated, I will stay in the USA. But it’s gotta happen before I leave next year.
Unless you are an orphan you were raised by a boomer or boomers who probably spent more on you raising you than you are worth raising but that is what parents do. Most kids grow out of their anger issues with their parents. Some do not.
Wherever you’re going, most natives will resent you for driving up their cost of living. Retired Americans are not welcome with open arms like they think they will be. Your lower living expenses will be offset by a higher risk to your personal safety and property.
Be prepared to pay for private security. You’ll also be a prime target for extortion by your neighbors and the local police. For example, you may have to pay a “toll” to your neighbor every time you travel past their property.
“Your lower living expenses will be offset by a higher risk to your personal safety and property.”
Lol. There is a mass shooting every week in the USA, same for road rage shootings. Many people here comment on an imminent civil war or marshal law under Trump. The USA has the highest incarceration rate in the world.
Don’t worry, I’m not moving to Somalia or South Africa. I will be fine, I have a dozen friends and relatives that have already moved, I’m kinda the laggard.
good luck. i’ve lived a lot of places. change is good.
heard that ad for Temu, “shop like a billionaire”?
that is exactly what China has done for the US–it hid a stagnation of wages while providing cheap goods–poor people living like rich people–whie the rich people became immensely wealthy
the Henry Ford idea of building cars that the factory worker could afford is gone–there is too big a difference between factory wages and price if all parts and assembly were internal to the US
China is the biggest underpinning force of capitalism in America today
and the Chinese are some of the most money-oriented and motivated people in the world
In the US car factory workers can afford the cars they are building. Can you say the same for China?
hmm, how much of the car and components are ACTUALLY made in the US?
that all went away in the 70’s
the “affordable all US” car is long gone
Even back you never bought a new car when you were young unless you were a car nut and put all your money in and borrowed more. Normally we bought a used one and did all the work on it ourselves with our friends. It was great fun. Did the same with motorcycles or anything mechanic. Actually we started even out younger on playing with dismounted lawn mower engines. Shot each other with BB guns too. I miss those days.
Just like manufacturing other countries will pick up where we destroy Alzheimer’s studies for example Scientists on the Trump regime’s war on science in the US. “However bad everyone on the outside thinks it is, it is a million times worse. They’re dismantling and destroying everything.”
Can’t make an omelet without breaking a few eggs.
Are those French eggs or the expensive GMO American ones?
Eggs are eggs when it comes to allegories unless of course they are golden then you have to allude as to who is the goose.