Data out Monday showed activity in the manufacturing grew less than expected in February while costs increased.
The Institute for Supply Management’s manufacturing PMI registered a reading of 50.3 in February, down from January’s 50.9 reading and below the 50.7 economists had expected. Readings above 50 for this index indicate an expansion in activity, while readings below 50 indicate a contraction.
The prices paid index surged to 62.4, up from 54.9 the month prior, reflecting companies’ continuing increase in costs.
“Demand eased, production stabilized, and destaffing continued as panelists’ companies experience the first operational shock of the new administration’s tariff policy,” Institute for Supply Management Chair Timothy Fiore wrote in the release. “Prices growth accelerated due to tariffs, causing new order placement backlogs, supplier delivery stoppages and manufacturing inventory impacts. Although tariffs do not go into force until mid-March, spot commodity prices have already risen about 20 percent.”
Another reading on manufacturing activity out Monday also raised concern about President Trump’s policies. The final reading of S&P Global’s manufacturing PMI hit 52.7 in February, above 51.2 in January and its highest level since June 2022.
Despite the upbeat index reading for February, S&P Global Market Intelligence chief business economist Chris Williamson noted that respondents’ optimism for the year ahead is waning.
“Business optimism about the year ahead has consequently fallen compared to the buoyant mood evident in January, with February seeing an increase in the number of companies citing concerns over tariffs and other policies introduced by the new Trump administration,” Williamson said in the release.