US Manufacturing Sees Sharpest Decline Since November

Manufacturing activity in the United States experienced its most significant decline in five months during April, with the sector facing continued challenges from soft demand and the lingering effects of trade policies. New data shows that factory output dropped at its sharpest rate since 2020, reflecting deeper instability in the industrial landscape.

The Institute for Supply Management (ISM) reported a contraction in its manufacturing index for the month. A central contributor to the downturn was the persistent weakness in new orders, which have now declined for three consecutive months. Alongside that, production levels fell, and backlogs were cleared at a quicker pace, all pointing toward subdued demand across key industrial segments.

Trade Uncertainty and Rising Costs Compound Pressures

Tariff-related uncertainty, particularly surrounding U.S. trade policy, continues to weigh heavily on the manufacturing outlook. The earlier strategy of increasing imports ahead of anticipated tariffs appears to be tapering off, as evidenced by a sharp drop in the ISM imports index. This decline marked the most significant drop in import activity since late 2023.

Despite a general decrease in energy prices, the costs of raw materials showed an upward trend. ISM’s price index revealed the highest levels of material input costs since mid-2022. The impact of these rising expenses, combined with sluggish demand, is now visible in factory workforce numbers. Manufacturing employment fell for a third straight month, underscoring ongoing efforts by producers to manage cost pressures.

Mixed Industry Performance and Broader Economic Signals

Not all sectors fared equally during the month. Eleven manufacturing industries reported growth, including apparel, petroleum, plastics, and rubber. However, six industries registered declines, contributing to an overall mixed performance across the manufacturing landscape.

The broader economic context adds to concerns. The start of 2025 saw the U.S. economy shrink, and incoming data from the second quarter suggests that a recession may be taking hold. Economists are warning that stagflation—a scenario of slow growth combined with rising prices—may be unfolding, with manufacturing providing a clear signal of these risks.

As tariff uncertainty, higher production costs, and contracting demand persist, manufacturers continue to struggle for momentum. The outlook for the sector remains clouded by both domestic policy factors and global economic headwinds, raising further concerns about the resilience of the U.S. industrial base in the months ahead.