US Manufacturing Shows Signs of Improvement as Factory Output, Orders Tick Higher

April 23, 2025 TruthUSA

Factory activity improved in April while price pressures and uncertainty related to the Trump administration’s trade policies weigh on the outlook.

U.S. manufacturing showed modest but meaningful signs of improvement in April, according to data released Wednesday by S&P Global, which showed factory output and new orders ticking higher.

The April 23 report, combined with Federal Reserve data, suggests America’s industrial sector is stabilizing amid tariff-related uncertainties.

The S&P Global Flash U.S. Manufacturing PMI rose to 50.7 in April from 50.2 in March, marking a two-month high and remaining just above the neutral 50 threshold that separates expansion from contraction.

Factory output also returned to growth, edging up to 50.2 from a contractionary reading of 48.6 in the prior month. The improvement, though modest, points to a sector that is adapting to volatile conditions while benefiting from stronger domestic demand.

The data comes as the Trump administration continues to implement sweeping tariffs as part of a broader effort to revive America’s long-declining industrial base. President Donald Trump’s trade strategy aims to close trade deficits, encourage the reshoring of U.S. production, and fund tax cuts through increased tariff revenue. While the policy has rattled markets, it has also begun to alter sourcing decisions and drive some gains in domestic manufacturing.

“While tariffs had in some instances reportedly helped drive new sales to domestic customers, trade policy was widely linked to falling foreign sales,” the S&P Global report states, noting that the overall uptick in factory orders was constrained by a drop in export orders.

Inventories held steady, and longer delivery times for manufactured products were once again reported—a sign typically associated with busier supply chains. However, factory employment fell for the first time since October, signaling caution on labor investment.

Business sentiment, meanwhile, continued to deteriorate. According to S&P Global, manufacturers’ confidence in future output fell to its lowest level since last August, reflecting concerns about higher input costs, supply disruptions, and weakening export demand. Still, some manufacturers expressed optimism about the long-term benefits of trade protectionism.

The somewhat brighter manufacturing picture in the S&P Global report was generally reinforced by the Federal Reserve’s latest Beige Book.

According to the report, overall economic activity has been little changed since March, with uncertainty around the Trump administration’s tariff policies described as “pervasive.” While most of the Fed’s 12 Districts described factory activity as flat or mixed, some—including Dallas, Minneapolis, and Philadelphia—noted modest improvements.

“Contacts in the manufacturing, construction, and retail sectors reported hiring additional staff to accommodate business expansion and increased demand,” the Federal Reserve Bank of Cleveland noted in its report.

Meanwhile, several Fed Districts reported that businesses were pausing hiring or scaling back plans due to a lack of clarity on trade policy and broader economic direction. Labor availability appeared to improve in some regions, but firms remained cautious, with “scattered” reports of companies preparing for potential layoffs amid tepid demand and rising costs.

Price pressures also emerged as a central concern. The S&P Global report found that average prices charged by manufacturers rose in April at the fastest pace in nearly two and a half years, driven by a combination of tariff-related cost increases, supply constraints, and higher wages. Input cost inflation surged to its highest level since August 2022, underscoring the challenges manufacturers face as they attempt to pass on expenses to consumers without eroding demand.

Chris Williamson, chief business economist at S&P Global, said in a statement that these higher prices will inevitably feed through to higher consumer inflation, potentially limiting the scope for the Federal Reserve to reduce interest rates at a time when a slowing economy looks in need of a boost.”

While economic growth has cooled—April’s composite PMI reading fell to a 16-month low—accelerating price pressures potentially complicate the central bank’s efforts to ease monetary policy.

Trump has called on the Fed to cut interest rates to support the economic recovery, but central officials have said they are waiting for greater clarity on the impact of the tariffs before taking action.

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