US Manufacturing Holds Up as Costs Gauge Hits Four-Year High
A worker arc welds a metal door during production at a manufacturing facility in Sacramento. (David Paul Morris/Bloomberg)
May 1, 2026 11:01 AM, EDT
This year’s U.S. 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 May 1.
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 April 30 showed the Federal Reserve’s preferred gauge of inflation jumped in March by the most since 2022.
.@ISM® Manufacturing PMI® Report: New orders ticked up, #employment contracted further and the prices elevator went even higher as #tariffs and the Middle East conflict remained headaches. The #ISMPMI was 52.7% for a second straight month. https://t.co/J7Z1OI1HlC #economy
— Institute for Supply Management (@ism) May 1, 2026
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.
The group’s gauge of employment fell to a four-month low, indicating factory head count 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.
