The manufacturing sector contracted at a faster pace for the 2nd straight month, according to the ISM Purchasing Managers Index for April.

In fairness, manufacturing has been contracting for all but 2 months over the last 2.5 years, and remains above the 42.3 level, which would signal the overall economy is in contraction.

All three of the forward-looking components within the index (new orders, production, employment) remain in contraction territory, although new orders & employment improved slightly.

New orders increased from 45.2 to 47.2, with eight industries reporting growth.

Production fell from 48.3 to 44.0 with seven industries reporting growth.

Employment increased from 44.7 to 46.5, with 5 industries reporting growth.

The prices paid index continues to increase at a faster pace, with 15 of the 18 manufacturing industries reporting having to pay higher prices for inputs.

As you can imagine, all the responses had to do with the tariffs. A couple of examples:

• Chemical products company cites being hit double by the new policies. Once from the suppliers that generate a tariff, and then from different suppliers that pass on surcharges in the form of price increases
• “Tariffs impacting operations — specifically, delayed border crossings and duties calculations that are complex and not completely understood. As a result, we are potentially overpaying duties. Unsure of potential drawbacks. Implementation of tariffs and their application is sudden and abrupt. The business is taking countermeasures.” [Transportation Equipment]
• “Strategic procurement and the supply chain are paralyzed in a world that changes daily due to tariffs.” [Nonmetallic Mineral Products]

The list goes on. Unfortunately, small and mid-sized businesses will probably be hurt the most by this.