US manufacturing expansion continues in April despite Iran war
This year’s US manufacturing expansion extended into April even as the Iran war drove input prices sharply higher.
The Institute for Supply Management’s gauge of prices paid for manufacturing inputs climbed for a fourth straight month to a four-year high of 84.6, according to data released Friday.
The group’s measure of overall factory activity held steady at 52.7, matching the highest level since 2022. Readings above 50 indicate growth.
Military conflict in the Middle East and the effective closure of the Strait of Hormuz have disrupted supply chains around the world, driving up the cost of oil and other materials like aluminum and helium. Higher gasoline and diesel prices have also made shipping products more expensive.
Thirteen manufacturing industries reported growth in April, led by textile mills, nonmetallic mineral products and primary metals. Three industries indicated a contraction.
Sustained inflationary pressures may spur manufacturers to hike prices too, which could ultimately lead to higher costs for consumer goods. Data out Thursday showed the Federal Reserve’s preferred gauge of inflation jumped in March by the most since 2022.
The ISM report showed new orders picked up in April as production growth decelerated. A measure of supplier deliveries rose to the highest level since 2022, with the longer lead times likely a result of war-related disruptions.
Select ISM Industry Comments
“Demand for manufactured goods is trending higher versus last year; however, geopolitical uncertainty and rising oil and diesel prices continue to weigh on demand. Many customers are exercising caution and remain in a wait-and-watch mode.” — Transportation Equipment
“Geopolitical risk, especially in the Middle East, as it pertains to commodity and energy markets remains a concern and is being monitored by the business. Supply chain risk concerns pertaining to increased cost and transit time for rerouted shipments due to conflict in the Red Sea, Strait of Hormuz and Suez Canal.” — Transportation Equipment
“Continuing fluctuation in US tariffs as well as market constraints for certain materials are affecting our current business.” — Computer and Electronic Products
“All products tied to crude, polyethylene resin or energy (liquified natural gas) have seen multiple increase spikes tied to the Iran crisis and market supply inflation.” — Chemical Products
“Revenues are very strong. However, price increases are similar to a few years ago with the supply chain crisis. All imports from China are up 15 percent to 25 percent, which is impossible for us to absorb or to fully pass along.” — Chemical Products
“General uncertainty over the total impact of the U.S.-Iran war. Have not yet started to see the full impact of fuel increases but are aware they are coming.” — Machinery
“Business levels have been decent this year, in line with the same period last year and improved from the second half of 2025. However, higher cost pressures are impacting margins.” — Fabricated Metal Products
“Our business remains strong and stable, but there are a lot of concerns in the geopolitical arena. If the Iran conflict persists, the impact on market pricing and supply continuity could be extreme. Electronics component market remains very volatile (pricing and continuity) based on AI.” — Miscellaneous Manufacturing
The group’s gauge of employment fell to a four-month low, indicating factory headcount continued to shrink. The government’s April employment report is scheduled to be released May 8.
“Among panelists, 60% indicated that managing head counts remains the norm at their companies as opposed to hiring, and of those managing head counts, 34% are using layoffs and 43% using attrition or not backfilling positions,” Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said in a statement.
— By Jarrell Dillard
