In March 2025, the manufacturing sector in the United States contracted, with slowing supplier deliveries and increasing prices, which most respondents put down to recent tariff issues.
Manufacturing Report Recap
The Manufacturing Purchasing Managers’ Index dropped 1.3 percentage points to 49% from 50.3% in February 2025. Though the manufacturing sector contracted in March, the overall economy remained in expansion for the 59th consecutive month.
Indices that contracted include New Orders, Production, Backlog of Orders, Supplier Deliveries, and New Export Orders, while the Prices, Inventories, and Imports indices increased.
Industries and Commodities
There were seven industries that contracted in March, including wood, paper, and plastics & rubber products. Nine industries—such as textile mills, petroleum & coal products, and fabricated metal products—reported growth.
Prices increased for nearly 20 commodities, including key metals like aluminum, brass, copper, and steel. Other affected materials were corrugated boxes, electrical and electronic components (both in short supply), and packaging, while industrial alcohols and natural gas were down in price. Cable assemblies and critical minerals were also in short supply.
Tariff Implications
According to the report and respondents from various industries, recent tariffs are creating uncertainty. Businesses have been stocking up on inventory to get ahead of possible tariff increases, but this is expected to reverse once trade issues settle.
Prices have also risen, mainly due to higher steel and aluminum costs linked to tariffs. These price hikes have caused supplier delays and order backlogs, with customers rushing to place orders before costs go up even more.
Trade Issues
Negotiations are also slowing as buyers and sellers try to decide who will cover the extra tariff costs. Despite these challenges, respondents believe the disruptions are temporary and should ease once trade conditions become clearer.
Internationally, Canada’s new tariffs on U.S. goods have sharply reduced orders, while demand from Europe has weakened due to fears of retaliatory tariffs.
Image Credit: Shutterstock/Alii Sher
