US Manufacturing Shrinks in March on Uncertain Tariff Picture

U.S. manufacturing activity contracted again in March, snapping a two-month expansion as firms contended with uncertainty over tariffs, according to survey data published Tuesday.

Traders are nervously preparing for sweeping reciprocal tariffs on April 2, which U.S. President Donald Trump has dubbed "liberation day," without providing much detail on the levies that are set to be imposed.

The Institute for Supply Management (ISM) manufacturing index slipped to 49.0% last month, a 1.3 percentage point fall from February.

This was below the market consensus estimate of 49.8%, according to Briefing.com, and less than the 50-point mark separating expansion from contraction.

"U.S. manufacturing activity slipped into contraction after expanding only marginally in February," ISM Survey Chief Timothy Fiore said in a statement. "The expansion in both February and January followed 26 consecutive months of contraction."

"Demand and production retreated and destaffing continued, as panelists' companies responded to demand confusion," he added, noting that price growth had accelerated "due to tariffs."

Tariffs had also caused a backlog in new order placement, supplier delivery slowdowns and manufacturing inventory growth, he said.

Some of the firms who responded to the survey flagged trade uncertainty as a key concern.

One respondent in the computer and electronics sector noted that customers were "pulling in orders due to anxiety about continued tariffs and pricing pressures."

Business conditions are "deteriorating at a fast pace," noted another in the machinery sector, adding: "Tariffs and economic uncertainty are making the current business environment challenging."