By Bob Willis

May 1, 2025 - US manufacturing activity contracted in April for a second month, as output and new orders slowed on tariff policy uncertainty, while price gains accelerated.

The Institute for Supply Management's manufacturing purchasing managers' index (PMI) fell to 48.7 in April, down from 49 in March and the lowest since last November. The threshold between contraction and expansion is 50.

The two-month contraction in manufacturing activity follows a two-month expansion preceded by 26 consecutive months of contraction. ISM's services PMI, a separate report that tracks the biggest part of the economy, showed nine months of expansion through March.

"Demand and production retreated and de-staffing continued, as panelists' companies responded to an unknown economic environment," ISM said Thursday. "Prices growth accelerated slightly due to tariffs, causing new-order placement backlogs, supplier delivery slowdowns and manufacturing inventory growth."

The manufacturing data follows a report Wednesday that showed the US economy contracted at an annualized 0.3pc pace in the first quarter as businesses boosted imports and stocked up on goods ahead of US import tariffs.

The ISM's new-orders index came in at 47.2, higher than 45.2 in March but showing contraction for a third month.

The production index fell to 44, showing a deepening contraction from 48.3 in the prior month. Employment rose by 1.8 points to 46.5, showing a slowing contraction.

New export orders contracted faster at 43.1 in April, while imports entered contraction at 47.1 after barely growing, at 50.1, the prior month.

The prices index rose to 69.8, up from 69.4 the prior month and signaling quickening expansion.

The inventories index fell by 2.6 points to 50.8, marking a second month of expansion after six months of contraction.