packageManager not respected when package.json is in a directory

[daveisfera]

Description:
packageManager is respected when package.json is at the root level, but not when it's in a directory

Action version:
Tested in 5.0 and 4.4

Platform:

• Ubuntu
• macOS
• Windows

Runner type:

• Hosted
• Self-hosted

Tools version:
Node 22 and 24 and yarn 4.10.3

Repro steps:
Specify node-version-file in a directory, like this

Expected behavior:
yarn version in packageManager would be used even when package.json is in a directory

Actual behavior:
Classic version of yarn is incorrectly used

See example here:
https://github.com/daveisfera/test_setup-node_packageManager/actions/runs/18364960502/job/52316018966

[gowridurgad]

Hi @daveisfera,
Thank you for creating this issue. We will investigate it and provide feedback as soon as we have some updates.