U.S. ISM Manufacturing Purchasing Managers Index (PMI)

 

The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers Inventories, Employment, and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction and the negative economic direction and the diffusion index. 

🔍 What Does the PMI Measure?

It tracks five major components:

1. New Orders – Demand for goods.
2. Production – Output levels.
3. Employment – Manufacturing jobs added or lost.
4. Supplier Deliveries – How fast suppliers deliver goods.
5. Inventories – Stock levels held by manufacturers.

Each component is scored and combined into a single number:

• Above 50 = Expansion in manufacturing
• Below 50 = Contraction
• Exactly 50 = No change

The U.S. ISM Manufacturing Purchasing Managers Index (PMI) for April 2025 declined to 48.7, down from 49.0 in March, indicating a continued contraction in the manufacturing sector. A PMI reading below 50 signifies a contraction in manufacturing activity.

Key Highlights:

• Production and New Orders: Production levels fell to their lowest since the onset of the COVID-19 pandemic in 2020. New orders remained in contraction territory, with export orders dropping sharply to a five-year low.
• Employment: The Employment Index improved slightly to 46.5 from 44.7 in March, but still indicates job reductions in the sector. Companies are opting for layoffs over attrition due to the urgency of cost-cutting measures
• Prices: The Prices Index rose to 69.8, reflecting increased input costs, partly due to tariffs on imports and higher prices from domestic suppliers. 
• Tariffs Impact: Recent tariffs, including a 145% duty on Chinese imports announced during President Trump's "Liberation Day," have exacerbated supply chain challenges and elevated input prices, contributing to the sector's downturn. 

Overall, the manufacturing sector's contraction is influenced by weakened demand, rising costs, and trade tensions, signaling potential challenges ahead for the U.S. economy.