- KPI – April 2026: The Brief
- KPI – April 2026: State of Business – Automotive Industry
- KPI – April 2026: State of the Economy
- KPI – April 2026: Consumer Trends
- KPI – April 2026: Recent Vehicle Recalls
Economic activity in the manufacturing sector expanded in March for the third consecutive month, say the nation’s supply executives in the latest ISM Manufacturing PMI Report. The Manufacturing PMI registered 52.7% in March, a 0.3-percentage point increase compared to the reading of 52.4% in February. The overall economy continued to expand for the 17th month in a row.
“In March, U.S. manufacturing activity remained in expansion territory, growing at a slightly faster pace than the month before. Of the five subindexes that make up the PMI, the New Orders Index indicated slower growth compared to the previous month, the Production Index grew at a faster rate, and the Employment and Inventories indexes remained in contraction. This month also marks the first report with panelists citing the Iran war as a new impact to their business, along with ongoing uncertainty with U.S. economic policy, despite the recent Supreme Court ruling striking down International Emergency Economic Powers Act (IEEPA) tariffs. In March, 64% of comments overall were negative. Among the negative comments, about 20% cited tariffs and about 40% the war in the Middle East,” says Susan Spence, MBA, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.
Data shows 16% of the sector’s gross domestic product (GDP) contracted in March, compared to 21% in February. The percentage of manufacturing GDP in strong contraction (defined as a composite PMI of 45% or lower) increased to 4%, compared to 1% in February.
“The share of sector GDP with a PMI at or below 45% is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, four (Transportation Equipment; Computer & Electronic Products; Machinery; and Chemical Products) expanded in March,” Spence says.
Important Takeaways, Courtesy of the Manufacturing ISM Report On Business:
- Two demand indicators (the New Orders and Backlog of Orders indexes) expanded, while the New Export Orders Index returned to contraction and the Customers’ Inventories Index remained in “too low” territory, contracting at a slightly slower rate. A “too low” status for the Customers’ Inventories Index is usually considered positive for future production.
- Regarding output, the Production Index expanded for the fifth month in a row, while the Employment Index decreased by 0.1-percentage point and remained in contraction. Among panelists, 55% indicated that managing headcounts remains the norm at their companies, as opposed to hiring.
- Inputs—defined as supplier deliveries, inventories, prices and imports—had mixed results. The Supplier Deliveries Index indicated increasingly slowing deliveries, while the Inventories Index contracted at a faster rate and the Prices Index took another big leap from 70.5% in February to 78.3% in March. The Imports Index lost 2.3 percentage points for a reading of 52.6%, compared to 54.9% in February.
What Respondents Are Saying:
- “This is expected to be a transition year for the U.S. trucking market, with gradual stabilization driven by capacity tightening and replacement demand instead of growth. Demand should stay constrained by weak carrier profitability and high equipment costs but improve modestly late in the year.” [Transportation Equipment]
- “Changes in the tariff structure are bringing cautious opportunities to offset significant costs for the balance of 2026. The actions in Iran, however, add a new wrinkle to energy costs throughout the world, including India. We continue to try and plan for the unpredictable and unexpected.” [Transportation Equipment]
- “We’re seeing steady increases in activity, but geopolitical issues and the Iran war are already waning sentiment.” [Fabricated Metal Products]
- “Customer orders have increased considerably as the construction market remains strong, resulting in higher production volume and increased forecasts to suppliers.” [Machinery]
- “Current Middle East unrest is already starting to impact business operations by increasing lead times, costs, container delays and the like.” [Food, Beverage & Tobacco Products]
- “Lots of relief from Supreme Court striking down (emergency) tariffs, particularly with organic cane sugar from Brazil.” [Food, Beverage & Tobacco Products]
- “Geopolitical tensions related to the conflict in Iran are contributing to rising manufacturing supply costs, and ongoing tariff uncertainty is negatively impacting purchasing strategies and cost forecasts.” [Chemical Products]
- “Ongoing geopolitical instability has emerged as a persistent factor influencing global trade dynamics. We anticipate strategic realignment of supply chains as organizations respond to energy market volatility and shifting trade policies. In light of these macroeconomic headwinds, we—like most organizations—are maintaining a cautious posture regarding investment commitments while continuing to monitor market conditions closely. Our purchasing strategy is being recalibrated to address supply chain vulnerabilities exposed by energy market volatility and evolving trade protectionism.” [Chemical Products]
- “Metal commodity prices continue to put pressure on mechanical commodities. Memory price escalation is causing large cost increases that cannot be mitigated in other areas of the product cost.” [Computer & Electronic Products]
- “The Middle East war has created domestic and global turmoil for the olefins and polyolefins business. Feedstocks and finished product pricing are accelerating dramatically as Middle Eastern and Asian producers suffer from shipping blockages. Global customers for packaging resins are scrambling to cover needs from North America and South America in the face of supply chain complications.” [Plastics & Rubber Products]
