The US manufacturing sector slowed down in February, with activity contracting due to President Trump’s tariff policies. The Institute for Supply Management’s (ISM) manufacturing PMI fell to 50.3, below the expected reading of 50.7, indicating a contraction in the sector.
However, costs increased significantly, with the prices paid index surging to 62.4, its highest level since July 2022. This reflects company costs continuing to rise due to tariffs.
Employment contracted further, with the employment index falling to 47.6, down from 50.3 in January. The decline was attributed to the impact of tariff policies on businesses, leading to reduced hiring plans and destaffing.
Experts expect the situation to worsen if Trump’s proposed 25% tariffs on Mexico and Canada are enacted, with prices continuing to increase and manufacturing activity further weakening.
Capital Economics’ North America economist Thomas Ryan noted that the ISM data supports his view of a goods-driven resurgence in core inflation in the second half of the year. The report’s negative tone added to fears that the economy has taken a sudden turn for the worse.
The decline in the ISM manufacturing index and the drop in employment numbers have raised concerns about the economy’s overall health, with some experts warning that it may be headed for a tougher route.
Source: https://finance.yahoo.com/news/us-manufacturing-hit-by-operational-shock-of-trump-tariffs-pushing-costs-up-162627949.html