Activity in US manufacturing sector slowed further in February – PMI

The US ISM Manufacturing Purchasing Managers’ Index (PMI) fell to 47.8 in February from 49.1 in January, marking the 16th consecutive month below the 50-point threshold, indicating a contraction in manufacturing., the longest since the period from August 2000 to January 2002.

Factory employment, as measured by the survey, dropped to 45.9, the lowest reading since July of the previous year.

Despite the decline in employment, the report notes that this measure has not been a reliable predictor of manufacturing payrolls in the government’s employment report.

The new orders sub-index, a forward-looking indicator, decreased to 49.2 from 52.5 in January.

Production at factories also saw a decline, with the sub-index dropping to 48.4 from 50.4 in January.

There was a slight indication of supply chain constraints, likely due to weather-related disruptions. The survey’s measure of supplier deliveries rose to 50.1 from 49.1 in the previous month, indicating slower deliveries.

Inflation at the factory gate remained moderate, with the survey’s measure of prices paid by manufacturers slipping to 52.5 from 52.9 in January.

Despite the challenges in manufacturing, the broader economy continued to grow, increasing at a 3.2% annualized rate in the fourth quarter.

The Federal Reserve is expected to start cutting interest rates sometime in the year, as higher borrowing costs have impacted demand for goods and weighed on business investment.

Overall, the US manufacturing sector faces ongoing challenges, with contraction persisting, employment dropping, and various indicators pointing to a struggling recovery.
The situation is being closely monitored in the context of broader economic growth, and the Federal Reserve is expected to take measures to address the economic challenges.