S&P Global: Tariffs Drive Manufactured Goods Price Increases to 29-Month High

Prices charged for goods and services rose at the sharpest rate seen in 13 months in April, with tariffs driving an especially steep increase in prices of manufactured goods, S&P Global said Wednesday (April 23).

The rate of inflation in manufacturing hit a 29-month high, while that in services rose to a seven-month high, S&P Global said in a Wednesday press release outlining its flash Purchasing Managers’ Index (PMI) survey data, which precedes the final April PMI survey data to be released May 1 and May 5.

The release attributed the higher prices to rising costs caused by tariffs, import prices and labor costs.

“These higher prices will inevitably feed through to higher consumer inflation, potentially limiting the scope for the Federal Reserve to reduce interest rates at a time when a slowing economy looks in need of a boost,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in the release.

The survey also found that April has also seen the growth in U.S. business activity slow to a 16-month low and business expectations about the year ahead drop to one of the lowest levels since the pandemic.

The release attributed the slowdown of growth in the service sector to uncertainty about the economy and tariffs and a fall in exports of services like tourism-related activity and cross-border services.

In manufacturing, a slight increase in domestic orders, which was driven in part by tariffs, was partially offset by a fall in export orders that was linked to trade policy, according to the release.

“Confidence about business conditions in the year ahead has meanwhile deteriorated sharply, worsening among manufacturers and service providers alike, largely thanks to growing concerns about the impact of recent government policy announcements,” Williamson said.

The International Monetary Fund (IMF) said Tuesday (April 22) that it reduced its forecast for economic growth in the United States in 2025 by 0.9 percentage point — from 2.7% in January to 1.8% currently — because of the impact of tariffs and escalating trade tension.

Federal Reserve Bank of Chicago President Austan Goolsbee said Sunday (April 20) that tariff-related “panic buying” in the U.S. could create an “artificially high” level of economic activity ahead of an economic slump.