Haver Analytics
Haver Analytics
| Mar 01 2024

U.S. ISM Manufacturing PMI Unexpectedly Declines in February

  • Index reverses most of January rise.
  • Four of five components decline.
  • Price index slips.

The Purchasing Managers Index of activity in the manufacturing sector fell to 47.8 in February, after rising in January to 49.1, according to the Institute for Supply Management. Remaining below 50, the index has indicated contraction in U.S. manufacturing sector activity since November 2022. The index peaked at 64.0 in March 2021. A February reading of 49.2 had been expected in the Action Economics Forecast Survey.

Most index components declined last month. The new orders index fell to 49.2 from 52.5 in January. Twenty-four percent (NSA) of survey participants reported increased orders while 17.4% reported declines. The production index weakened to 48.4 from 50.4. It was the lowest level since July 2023 and below the recent high of 51.9 this past September. Eighteen percent (NSA) of respondents reported higher production while 17.2% indicated decline. The employment index fell to 45.9 in February from 47.1 in January. It remained below a high of 50.9 in September. Eleven percent (NSA) of survey participants reported higher employment while 18.6% reported decline. The inventories index fell to 45.3 from 46.2. It remained above an October low of 43.6.

Indicating slower delivery speeds, the supplier delivery series of 50.1 compared to 49.1 in January. It was increased from a low of 43.5 in May of last year. Nine percent (NSA) of survey respondents reported slower product delivery speeds while the same percentage reported a quickening, down from a high of 22.1% in December 2022.

The prices index eased to 52.5 (NSA) last month from 52.9 in January. It remained up from a low of 39.4 in December 2022. The index peaked at 92.1 in June 2021 and averaged 46.6 last year. Eighteen percent of respondents reported higher prices last month while 13.4% reported price declines.

In other series, the export order index jumped to 51.6 in February, its highest level since July 2022 and up from the January 2024 low of 45.2. Twelve percent (NSA) of respondents reported higher exports while 8.8% reported declines. The imports series surged to 53.0, its highest level since July 2022. The order backlog index jumped to 46.3 (NSA) last month, up from a low of 37.5 in May of last year.

The ISM figures are based on responses from over 400 purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states.

These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver's AS1REPNA database.

There and Back Again from New York Fed President & CEO John C. Williams can be found here.

  • Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio.   Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984.   He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C.   In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists.   Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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