U.S. manufacturers say inflation is bad and not getting any better

U.S. manufacturers are reporting a mixed picture: business is expanding, order books are full, but cost pressures are not easing. According to the latest industry survey, high energy prices and the new tariffs introduced under the Trump administration are weighing on growth, preventing what would otherwise be an even stronger expansion.

The key takeaway is that demand does not appear to be the problem. New orders remain healthy, which suggests customers are still spending and supply chains are moving. Instead, the constraint is on the cost side. When energy and imported inputs become more expensive, manufacturers face a choice between absorbing thinner margins or passing costs downstream — a dynamic that can feed broader inflation.

For markets, this matters because it complicates the outlook for interest rates. Persistent input-cost inflation gives central bankers less room to ease policy, even as growth shows signs of slowing. Investors watching industrials, energy, and rate-sensitive sectors will want to track whether these cost pressures fade in coming months or become embedded in pricing.