Factory activities improved in April, but price pressures and uncertainties associated with the Trump administration’s trade policy were focused on the outlook.
The US manufacturer showed modest yet meaningful signs of improvement in April, according to data released Wednesday by S&P Global.
The S&P Global Flash US Manufacturing PMI rose from 50.2 in March to 50.7 in April, showing a height of two months, slightly above the neutral 50th threshold that separates expansion from contraction.
Factory production has also returned to growth, reducing edges of up to 50.2 from the contractile reading of 48.6 the previous month. This improvement, albeit modest, shows sectors that are adapting to instability, benefiting from strengthened domestic demand.
This data comes as the Trump administration continues to implement drastic tariffs as part of a broader effort to revive America’s long-standing industrial bases. President Donald Trump’s trade strategy aims to shut down the trade deficit, encourage US production to reuse and cut funding through increased tariff revenue. The policy rattles the market, but it is beginning to change its sourcing decisions and promote profits for domestic manufacturing.
“Taxes reportedly promoted new sales to domestic customers in some instances, but trade policies were widely linked to lower foreign sales,” S&P Global Report said, saying that the overall increase in factory orders is constrained by a decline in export orders.
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The inventory is stable, and delivery times for manufactured products have increased, and was reported again. This is usually associated with busy supply chains. However, factory employment has declined for the first time since October, and is paying attention to labor investments.
Meanwhile, business sentiment continued to deteriorate. According to S&P Global, manufacturers’ confidence in future output has fallen to their lowest levels since last August, reflecting concerns about increased input costs, disruption in supply and weakening export demand. Still, some manufacturers have expressed optimism about the long-term benefits of trade protectionism.
The slightly brighter manufacturing photos of the S&P Global Report were generally reinforced by the latest beige books in the Federal Reserve.
Meanwhile, several Fed districts reported that businesses are suspending employment, returning or expanding plans due to lack of clarity in trade policy and a wider economic orientation. Although labor availability appeared to have improved in some areas, businesses remained cautious with “scattered” reports that they were preparing for potential layoffs amid lukewarm demand and rising costs.
Price pressure has also emerged as a central concern. The S&P Global Report found that the average price charged by manufacturers rose in April at the fastest pace in nearly two and a half years, driven by a combination of increased tariff-related costs, supply constraints and higher wages. The inflation rate in input costs has skyrocketed to the highest level since August 2022, highlighting the challenges manufacturers face when trying to hand over costs to consumers without eroding demand.
In a statement, Chris Williamson, chief business economist at S&P Global, said these higher prices could inevitably withstand consumer inflation, and could limit the scope to cut interest rates during a time when the Federal Reserve is declining.
While economic growth is chilling, April’s combined PMI reads have fallen to a 16-month low, but an increase in price pressure could potentially complicate central banks’ efforts to ease monetary policy.
Trump has called on the Fed to cut interest rates to help the economy recover, but central officials say they are waiting for a more clearer view of the impact of tariffs before taking action.
