Categories: Economy

US manufacturing slips into contraction as prices surge, pressured by Trump tariffs


Information out Tuesday confirmed exercise within the manufacturing sector slipped into contraction for the primary time this 12 months whereas prices continued to surge as suppliers weigh the impression of President Trump’s tariff coverage.

The Institute for Provide Administration’s manufacturing PMI registered a studying of 49.0 in March, down from February’s 50.3 studying and under the 49.5 economists polled by Bloomberg had anticipated. Readings above 50 for this index point out an growth in exercise, whereas readings under 50 point out a contraction.

The costs paid index surged to 69.4, up from 62.4 the month prior and the very best studying since June 2022, reflecting firms’ continued enhance in prices. Economists had anticipated a studying of 64.6.

“Demand and manufacturing retreated and destaffing continued, as panelists’ firms responded to demand confusion,” Institute for Provide Administration Chair Timothy Fiore wrote within the launch. “Costs development accelerated because of tariffs, inflicting new order placement backlogs, provider supply slowdowns and manufacturing stock development.”

One other studying on manufacturing exercise out Tuesday additionally raised issues over Trump’s tariff uncertainties. The last studying of S&P International’s manufacturing PMI hit 50.2 in March, down from a robust 52.7 in February.

Regardless of the slowdown, it was the third month the index registered a studying above 50 “however solely simply.”

“The PMI signaled a marginal enchancment in working situations that was the weakest of the 12 months up to now,” S&P International mentioned within the launch, noting a drop in manufacturing for the primary time since December weighed closely on the headline index whereas order books expanded solely modestly.

Chris Williamson, chief enterprise economist at S&P International Market Intelligence, mentioned within the launch, “The robust begin to the 12 months for US producers has faltered in March.”

President Donald Trump speaks to reporters earlier than signing an govt order within the Oval Workplace of the White Home in Washington, Monday, March 31, 2025. (Pool through AP) · ASSOCIATED PRESS

“Whereas enterprise confidence concerning the outlook stays comparatively elevated by requirements seen over the previous three years, that is primarily based on firms hoping that the near-term disruption attributable to tariffs and different insurance policies will probably be outmoded as longer-term advantages from the insurance policies of the brand new administration accrue,” he continued. “Nonetheless, March has seen extra producers query this perception.”

S&P mentioned a “key concern” amongst producers is the diploma to which heightened uncertainty ensuing from coverage modifications, notably tariffs, trigger clients to cancel or delay spending, together with the ripple impact in terms of rising prices and deteriorating provide chains.

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