Manufacturing Growth Slows in February as Customers ‘Wait-and-See’ on Tariffs

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Key Takeaways

• The Institute of Supply Management’s manufacturing Purchasing Managers Index (PMI) survey showed that the factory sector dilated in February, the second straight month of expansion after 26 straight months of contraction. 
• However, the February scan was down from the month before and came in below economists’ expectations.
• The prices paid index increased by 7.5 piece points as tariff uncertainty also caused new orders to fall.

After nearly two years of lackluster production, the U.S. mill sector’s efforts to mount a comeback slowed in February, with a closely-watched industry survey showing that bill of fare worries were making manufacturers nervous.

The Institute of Supply Management’s manufacturing Purchasing Managers Index (PMI) contemplate showed that the factory sector expanded in February with a 50.3% reading. It’s the second month in a row the index has journal above 50, indicating an expanding manufacturing sector, after 26 straight months of contraction. 

However, the February scrutiny reading was down from the month before and came lower than economists surveyed by The Wall Street Paper and Dow Jones Newswires expected.

The report weighed on market sentiment Monday as investors have grown increasingly interested about the health of the economy and the impact of policies being pursued by the Trump administration.

Tariffs Spur Concerns At hand Inflation

Selected commentary from the factory managers answering the survey pointed to worries over President Donald Trump’s duty policy, which includes 25% levies on Canada and Mexico set to go into effect tomorrow. 

“New orders plunged into contraction in February as excise uncertainty caused many downstream consumers to take a wait-and-see approach to expenses in 2025,” wrote Nationwide Postpositive major Economist Ben Ayers.

The potential impact of the tariffs was already causing some real price increases for manufacturers, as the prices paid marker rose by 7.5 percentage points to hit 62.4% in February.

“Prices growth accelerated due to tariffs, causing new order positioning backlogs, supplier delivery stoppages and manufacturing inventory impacts,” said Timothy Fiore, chair of the ISM Manufacturing Partnership Survey Committee.