- Prior 52.7
- Highest reading since May 2022
- New orders 56.8 vs 54.1 prior
- Production 54.3 vs 53.4 prior
- Employment 48.6 vs 46.4 prior
- Prices paid 82.1 vs 84.6 prior
- New export orders 50.6 vs 47.9 prior — back in expansion
This is a strong headline number and it’s the fifth straight month of expansion, but I’d be careful about taking the victory lap at face value.
The internals are genuinely good. New orders accelerating to 56.8 is the part that matters most — that’s the forward-looking piece, and it’s running well clear of the contraction lows from earlier in the cycle. Export orders clawing back above 50 and customers’ inventories sitting at a ‘too low’ 42.7 both point to a production tailwind into the summer. This is exactly the shape of report you want to see if you’re constructive on the manufacturing cycle.
Prices paid is the index to watch here. It eased to 82.1 from 84.6, which technically counts as a ‘good’ move, but an 82-handle is still screaming cost pressure. With oil sensitive to the Iran headlines, the disinflation-on-prices-paid story is one bad weekend away from reversing.
Employment at 48.6 is still in contraction, and the report’s own breakdown — half the panel holding head counts steady, half hiring — is not the labor backdrop of a sector firing on all cylinders. It’s improving though.
Comments in the report:
- “Impact of Iran conflict starting to directly and negatively impact
cost of supply chain. Oil and related commodities are escalating in
price.” [Transportation Equipment] - “The Middle East conflict is triggering shipment delays and
uncertainties. Elevated gas prices and inflation will surely impact our
purchases. However, over the last quarter, we’ve seen increased demand
that was unexpected.” [Machinery] - “As with all companies, we have felt the effects of fuel-related
inflation and general market uncertainty due to overall economic
variability and geopolitical events that have impacted such markets as
construction, automotive and agriculture, as well as the general
industrial sector.” [Chemical Products] - “Continuing trends of 15-percent sales increase in April, cost
increases on a majority of raw materials, and fuel charges on many
inbound and outbound deliveries. We remain cautiously optimistic that if
global economic factors stabilize and the Iran conflict ends, we can
continue with increased sales and maintain acceptable margins.”
[Chemical Products] - “Cost of diesel is having huge impacts on our profitability.
Confusion abounds around tariff refunds. We purchase many imported goods
but in most cases are not the importer of record, so it is currently
unclear to what we may be entitled.” [Food, Beverage & Tobacco
Products] - “Prices continue to rise for many products — some due to increase in
data center creation for electronic components, others as a result of
the Iran war and reductions in availability of oil/petroleum.” [Computer
& Electronic Products] - “Supply constraints continue to propagate and are a key headwind to
supporting increased aerospace and defense demand. Semiconductors,
critical minerals and certain types of raw materials are illustrative
examples of sales plans at risk. Corporate risk mitigation actions are
underway to secure supply in the midst of constraints.” [Transportation
Equipment] - “The current atmosphere is one of extreme uncertainty and concern
for the future in terms of both price stability and longer-term supply
continuity related to the Iran conflict and Strait of Hormuz closure. We
have a lot of negotiations in process related to requested price
increases, some related to oil prices and some still fallout from the
2025 tariff/geopolitical climate.” [Miscellaneous Manufacturing] - “Continued dynamic random-access memory (DRAM) volatility, increased
gas prices and tariffs are causing long lead constraints and price
hikes that customers are not willing to bear. Panic is starting within
our industry.” [Electrical Equipment, Appliances & Components] - “Business appears to be weakening — uncertainty surrounding the Iran
war, rising energy prices and customers unwilling to commit to
expenditures beyond a very short term.” [Fabricated Metal Products]
Earlier, the S&P Global US PMI was revised slightly lower to 55.1 from 55.3 in the preliminary report. The prior was 54.5 so it was still month-to-month improvement.
Finally, April US construction spending rose 0.4%, better than the 0.2% consensus.
This article was written by Adam Button at investinglive.com.
