03/03/25
US manufacturing slows in February: ISM
Houston, 3 March (Argus) — Manufacturing activity in the US slowed in February
as demand weakened, output growth eased and prices surged as producers braced
for a raft of tariffs threatened by the new US administration. The Institute for
Supply Management's (ISM) manufacturing purchasing managers index registered
50.3 in February, down from 50.9 in January, marking a second month of growth
after 26 consecutive months of contraction. The breakeven point between growth
and contraction is 50. Economists surveyed by Trading Economics had forecast
50.5 for the headline reading. "US manufacturing activity expanded marginally
for the second month in a row in February," ISM said. "Demand weakened, while
output stabilized. Inputs — defined as supplier deliveries, inventories, prices
and imports — revealed the first signs of supplier difficulties due to some
pull-forward deliveries and discussions about who will pay for tariffs." The new
orders index dropped back into contraction territory in February after expanding
for three months, registering 48.6 percent, down from 55.1 in January. The
production index was at 50.7, down from 52.5 in the prior month but still
showing growth after eight months of contraction. The prices index surged to
62.4, up from 54.9 in January. The backlog of orders index registered 46.8, up
from 44.9 in January. The employment index came in at 47.6, down from 50.3 the
prior month. The supplier deliveries index was at 54.5, up from 50.9 and
indicating further slowing in deliveries as the economy improves. The new export
orders index reading of 51.4 was down from 52.4 in January, showing slowing
growth. The imports index rose to 52.6, up from 51.1 in January. Comments
highlight tariff information vacuum Comments from survey participants showed a
great deal of uncertainty about how the White House's tariff plans would effect
operations and the economy. "The tariff environment regarding products from
Mexico and Canada has created uncertainty and volatility among our customers and
increased our exposure to retaliatory measures from these countries," a chemical
products producer said in the survey. A transportation equipment manufacturer
said that customers had paused new orders because of the many unknowns around
the US' tariff plans. "There is no clear direction from the administration on
how they will be implemented, so it's harder to project how they will affect
business," the company said. The threat of the tariffs had had minimal impact on
overall manufacturing and raw material supply as of the time of the survey,
according to an electronics manufacturer. But limits on US government spending
from organizations like the Food and Drug Administration, Environmental
Protection Agency and National Institutes of Health were delaying some orders,
the company said. But a machinery manufacturer said the pending tariffs were
leading to higher costs for its products. "Sweeping price increases are incoming
from suppliers. Most are noting increases in labor costs. Vendors are indicating
open capacity. Inflationary pressures are a concern," the company said in the
survey. By Bob Willis Send comments and request more information at
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