U.S. Manufacturing Index Edges Lower But Still Indicates Modest Growth In February

(RTTNews) - A report released by the Institute for Supply Management on Monday showed its reading on U.S. manufacturing edged slightly lower in February, although the index still indicated growth in the sector for the second straight month.

The ISM said its manufacturing PMI slipped to 50.3 in February after rising to 50.9 in January, but a reading above 50 still indicates growth. Economists had expected the index to dip to 50.5.

The modest decrease by the headline index partly reflected a notable downturn by new orders, as the new orders index slumped to 48.6 in February from 55.1 in January.

The production index also fell to 50.7 in February from 52.5 in January, while the employment index slid to 47.6 in February from 50.3 in January.

"Demand eased, production stabilized, and destaffing continued as panelists' companies experience the first operational shock of the new administration's tariff policy," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

The report also said the prices index surged to 62.4 in February from 54.9 in January, reflecting the largest month-over-month increase since January 2024.

"Prices growth accelerated due to tariffs, causing new order placement backlogs, supplier delivery stoppages and manufacturing inventory impacts," said Fiore. "Although tariffs do not go into force until mid-March, spot commodity prices have already risen about 20 percent."

On Wednesday, the ISM is scheduled to release a separate report on service sector activity in the month of February. The services PMI is currently expected to inch up to 52.9 in February after dipping to 52.8 in January.