The ISM Manufacturing PMI slipped simply 0.2 factors to 52.4 in February, nevertheless it nonetheless topped the 51.8 forecast and stayed firmly in enlargement territory. That makes it two straight months above 50, and solely the third time prior to now 40 months that manufacturing has managed to carry that line.
Whereas the headline determine pointed to continued resilience, the larger shock was the costs paid index, which surged 11.5 factors to 70.5, its highest degree since June 2022, signaling a dramatic acceleration in enter value pressures.
Key Takeaways
- Manufacturing expands for second straight month: The PMI slipped marginally to 52.4 from 52.6 in January however beat the 51.8 forecast, sustaining enlargement for the second consecutive month after 10 straight months in contraction
- Value pressures explode greater: The costs paid index soared to 70.5 from 59.0 — the sharpest single-month leap since March 2022 — pushed by rising metal and aluminum costs and tariff pass-through from suppliers
- New orders and manufacturing cool from January highs: New orders dipped to 55.8 from 57.1, whereas manufacturing eased to 53.5 from 55.9, each retreating from almost four-year highs hit in January however remaining firmly in enlargement territory
- Employment contracts for twenty ninth straight month: The employment index nudged as much as 48.8 from 48.1, with 45% of panelists nonetheless centered on managing headcounts slightly than hiring
- Order backlogs hit highest since Could 2022: The backlog of orders index jumped 5 factors to 56.6, suggesting a pipeline of demand constructing beneath the floor
- Provider deliveries proceed to gradual: The provider deliveries index rose to 55.1 from 54.4, indicating slower supply efficiency for the third consecutive month
Hyperlink to official ISM Manufacturing PMI Report (February 2026)
February’s report reveals a producing sector that’s holding up, however paying extra to do it. Twelve industries expanded whereas solely 5 contracted.
The true headline was tariff-driven inflation. A number of respondents pointed to rising enter prices tied to Trump’s import tariffs. Transportation tools corporations mentioned Part 232 is lifting costs whereas squeezing demand and margins, with U.S. produced metal and aluminum among the many costliest globally. Equipment makers echoed the identical theme, saying home sourcing of supplies like metal and wire is pushing prices greater.
Inflation dangers additionally obtained one other increase because the U.S. and Israel launched strikes on Iran, sending Brent crude sharply greater and rattling delivery via the Strait of Hormuz. ISM Chair Susan Spence mentioned she wouldn’t be shocked to see the costs index rise once more in March.
With enter prices accelerating, markets pared again expectations for a June Fed price lower, with CME’s FedWatch Instrument exhibiting decreased odds of easing within the close to time period.
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Market Reactions
U.S. Greenback vs. Main Currencies: 5-min
Overlay of USD vs. Main Currencies Chart Quicker with TradingView
The U.S. greenback, which dipped across the U.S. session open, jumped broadly after the better-than-expected ISM PMI print.
A stronger-than-expected headline and a pointy surge within the costs paid index strengthened the view that the Fed will not be in a rush to chop. USD/CHF led beneficial properties close to +0.60%, whereas EUR/USD slid, leaving USD/EUR up roughly +0.45% on the day.
The transfer held till across the London shut, when AUD/USD, NZD/USD, and GBP/USD staged sharp pullbacks, seemingly on revenue taking. On the similar time, USD/CHF spiked to contemporary session highs earlier than easing.
By the shut, the greenback remained broadly stronger. A producing beat, rising enter prices, fading price lower expectations, and better oil costs tied to Iran tensions saved regular bids beneath the dollar as each a hawkish Fed commerce and a protected haven play.
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