WASHINGTON (Reuters) – U.S. manufacturing activity slowed again in April. However, supply issues seem to be easing. The pace of price increases and backlogs at factories are slowing.

On Monday, the Institute for Supply Management (ISM), reported that their index of national manufacturing activity dropped to 55.4 from 57.1 last March.

If the index is above 50, it indicates an expansion in manufacturing. This sector accounts for 12 percent of the U.S. economic activity. Reuters polled economists and predicted that the index will rise to 57.6.

The cooling of manufacturing is also reflected in the fact that spending has been shifting back towards services such as travel and dining out. According to government data, Friday’s report showed that consumer spending for services increased by 8.5% in March. However, outlays for long-lasting goods fell for the second month in a row.

From 53.8 in March, the forward-looking sub-index of ISM’s new orders sub-index fell to 53.5. As the COVID-19 restriction on movement slowed, goods spending rose and customers inventories have been extremely tight for 60+ months. Manufacturing does not appear to be in danger.

From 65.4 in March, the survey measured supplier deliveries at 67.2. An increase in the percentage of suppliers deliveries above 50% means slower factory deliveries. Russia’s aggression against Ukraine has made it more difficult to supply factories, increasing the prices for oil and other commodities. China is also experiencing new lockdowns related to coronavirus.

There are some signs that supply is improving. According to the survey, 56 orders backlogs were recorded in April. This is down from 60.0. This was the second consecutive monthly decrease.

Inflation at the factory gates could be on the rise as supply pressures begin to ease. The measure of manufacturers’ prices dropped from 87.1 to 84.6 in March.

On Wednesday, the Federal Reserve will raise interest rates by half a percentage point. In March, the Fed increased its policy interest rate 25 basis points and will soon begin trimming assets.

Last month, however, factory floor workers were less plentiful. From 56.3 in March, the survey measured factory employment at 50.9. It is likely that this was due to difficulties in finding workers. At the end February, there were nearly 11.3 million open jobs.