US manufacturing activity slid to a five-month low in April as President Trump’s tariffs continued to create uncertainty for businesses.
The Institute for Supply Management’s manufacturing PMI fell to 48.7 in April, below the 49 seen the month prior. Readings below 50 indicate contraction in the sector.
The ISM’s prices paid index for the sector came in at 69.8, roughly flat compared to the prior month. Meanwhile, new orders increased to a reading of 47.2, above the 45.2 seen in March.
“In April, U.S. manufacturing activity slipped marginally further into contraction after expanding only marginally in February,” Institute for Supply Management chair Timothy Fiore said in a press release. “Demand and output weakened while input strengthened further, conditions that are not considered positive for economic growth.”
Read more: The latest news and updates on Trump’s tariffs
The ISM release includes comments from survey respondents across various industries. Jefferies US economist Thomas Simons wrote in a note to clients on Thursday that nearly all of the comments “described a state of near paralysis” as businesses struggle to account for the changing tariff policies.
“The tone of these comments suggests that business planning is impossible for the majority of manufacturers, irrespective of their industry specialty,” Simons wrote. “Frankly, it is a surprise that the index levels are as high as they are. These comments are consistent with a PMI reading in the 20s or 30s.”
In a separate release on Thursday, S&P Global’s manufacturing data showed activity held flat at a reading of 50.2 in April. Meanwhile, S&P Global noted that tariff impacts boosted both input and selling costs.
“It tells me that this process that started with the policy uncertainty and then moved to the markets is now starting to show up in the real data,” S&P Global Ratings global chief economist Paul Gruenwald told Yahoo Finance. “That’s kind of the last leg of this transmission.”
Gruenwald added that the “key variable” for the economy moving forward will be whether or not the labor market deteriorates further.
“If you want to differentiate between the slowdown scenario and the recession scenario, it’s going to center on the labor market,” Gruenwald said. “So if we start to see cracks in the labor market, that’s going to take us into the recession scenario. Not there yet, but we’re starting to see a little bit of weakness.”
