US Manufacturing Sector Shows Signs of Slowing Expansion

The US manufacturing sector continued to expand in February, albeit at a slower pace than the previous month, according to the latest report from the Institute for Supply Management (ISM) released on Monday.

Key Indicators Reflect Mixed Signals

The Manufacturing PMI stood at 50.3%, a slight decrease from January's 50.9%, indicating continued expansion. However, new orders and production have dipped back into contraction, with the New Orders Index falling by 6.5 percentage points to 48.6%. The Employment Index also saw a decline, dropping 2.7 percentage points month on month to 47.6%. On a brighter note, the Prices Index experienced a significant surge, increasing by 7.5 percentage points to 62.4%.

Impact of New Tariff Policies

"The initial operational shock from the new administration's tariff policy has led to eased demand, stabilized production, and continued destaffing. The acceleration in price growth, attributed to tariffs, has resulted in new order placement backlogs, supplier delivery stoppages, and impacts on manufacturing inventory. Despite tariffs not taking effect until mid-March, spot commodity prices have already risen by approximately 20 percent," explained ISM Chair Timothy Fiore.