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

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Iran war disrupts oil exports, US manufacturing costs surge

## Market Snapshot

The “Fed Rate Cuts Predictions for 2026” market is examining the likelihood of rate cuts, currently showing uncertainty due to inflation pressures. Meanwhile, the “Bitcoin Above on April 30” market indicates a 100% YES resolution, though underlying sentiment may be shifting. The “WTI Crude Oil Prices in May 2026” market lacks current pricing data but is closely tied to geopolitical developments.

## Key Takeaways

– Rising input costs due to the Iran war appear to suggest inflationary pressures, which could impact Fed rate cut expectations for 2026. – Current market pricing suggests Bitcoin remains above $86,000, though broader economic conditions may influence future sentiment. – The ongoing Iran conflict and its effect on oil supply routes are consistent with scenarios where WTI crude oil prices remain high, potentially exceeding $150.

## Article Body

The United States’ manufacturing sector continues its expansion into April 2026 despite challenges posed by the Iran war, which has led to a significant increase in input prices. The conflict, which began with US-Israel military strikes on Iranian facilities, has disrupted oil exports and critical shipping routes, notably the Strait of Hormuz. Oil prices have surged to wartime highs, impacting US manufacturing costs. Nevertheless, the defense sector has seen increased demand, with companies like RTX and Northrop Grumman reporting higher orders. The European Central Bank has cautioned that prolonged conflict could trigger stagflation and recession risks in the EU.

## Market Interpretation

The impact of rising input costs and geopolitical tensions appears consistent with a scenario where the Federal Reserve may hold off on rate cuts in 2026, suggesting a moderate impact on rate cut predictions. The Bitcoin market, despite showing a 100% YES for April 30, may face indirect pressures from a risk-off environment due to inflationary concerns. The WTI crude oil market reflects a high impact, with the potential for prices to reach $150, consistent with ongoing supply constraints from the Iran war.

## What to Watch

Observers should monitor upcoming Federal Reserve statements and inflation reports for indications of policy adjustments. Key developments in the Iran conflict, particularly around the Strait of Hormuz, will be crucial for WTI crude oil pricing. Additionally, any significant changes in Bitcoin’s sentiment or speculative asset trends could influence market dynamics, particularly if broader economic conditions shift.

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U.S. Department of War promotes defense manufacturing expansion

Key Points

• United States Secretary of War Pete Hegseth concluded the first phase of the Arsenal of Freedom tour with visits to General Dynamics and L3Harris facilities in Arkansas promoting faster domestic defense production.
• The Department of War used the nationwide tour to emphasize strengthening the U.S. defense industrial base and expanding workforce support tied to missile and advanced weapons manufacturing.

United States Secretary of War Pete Hegseth concluded the first phase of the Department’s nationwide “Arsenal of Freedom” tour on Feb. 27, 2026, with visits to defense industry facilities operated by General Dynamics and L3Harris in Camden, Arkansas, where he delivered remarks focused on expanding production capacity and accelerating weapons manufacturing.

The tour, organized by the United States Department of War, is intended to demonstrate federal support for the defense industrial base while urging industry and workforce leaders to increase output of military systems and modernize manufacturing practices supporting U.S. warfighters.

Speaking before more than 1,500 employees at the L3Harris facility, Hegseth highlighted the role of defense workers in sustaining military readiness.

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“Thank you for being the backbone of our department and our great nation [and] for having the backs of our warfighters because what you build right here in Camden is absolutely central to the 21st-century arsenal of freedom,” Hegseth said.

He added that the technologies produced at the site directly support advanced weapons programs.

“The technology that you build for our missiles, interceptors and hypersonic weapons is what allows the War Department to achieve peace through strength, and that mission comes with a nonnegotiable mandate from the War Department [and] straight from the Resolute Desk and President [Donald J.] Trump,” he said.

According to remarks released during the visit, Hegseth emphasized innovation and faster production timelines as core priorities of the tour. He encouraged industry partners to increase manufacturing tempo while maintaining technological advancement across defense programs.

(Photo by Alexander Kubitza)

The secretary also addressed long-standing concerns about inefficiencies within the defense industrial base, arguing that production culture must shift toward faster delivery cycles. Praising L3Harris operations in Camden, he said the company had “set the pace” for industry performance through rapid production practices.

“For far too long, our defense and aerospace industry was a giant swamp, much like Washington. … Those companies moved at a snail’s pace, led by CEOs who cared more about their stock options and golden parachutes than delivering for those on the front lines,” Hegseth said.

He further criticized earlier trends toward outsourcing defense production overseas, stating that domestic manufacturing remains central to national security priorities.

“Well, let them tell that to these great workers and these great patriots at L3,” Hegseth said during the event.

According to the Department of War, the Arkansas stop marked the conclusion of a seven-and-a-half-week first phase of the Arsenal of Freedom tour, which began Jan. 5 with a visit to a shipyard in Newport News, Virginia. The tour included additional stops in Texas, California, Rhode Island, Maine, Missouri, Florida, and Colorado.

As part of each visit, Hegseth has administered enlistment oaths to new service members. During the Arkansas stop, he swore in 40 recruits, bringing the total number of enlistees participating in ceremonies during the tour to more than 260.

(Photo by Alexander Kubitza)

The Department said the enlistment ceremonies are intended to link industrial workforce contributions with military service, underscoring the connection between manufacturing capacity and operational readiness.

In practical military terms, the facilities visited in Camden contribute components and systems supporting missile production, interceptor technologies, and hypersonic weapon development. These systems form part of layered defense architectures designed to counter aerial threats and maintain deterrence capabilities.

The Arsenal of Freedom initiative draws its name from the historical “Arsenal of Democracy,” the large-scale industrial mobilization undertaken by the United States prior to and during World War II, when domestic manufacturing was expanded to supply military equipment to Allied forces.

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