Factory Pulse

US Factories Stay in Growth Mode

US manufacturing expanded again in February, but it wasn’t a victory lap, it was a rare sighting. The ISM Manufacturing Purchasing Managers Index (PMI) came in at 52.4, barely below January’s 52.6, marking the second straight month above 50 after a long stretch of mostly “meh” reports.

A quick decoder: the PMI is built from New Orders, Production, Employment, Supplier Deliveries, and Inventories. Readings above 50 are good, below 50 not so good.

Orders Flow In, Backlogs Build

The “why” behind the expansion is demand. New Orders stayed strong at 55.8, and Backlogs jumped to 56.6, their highest since 2022. That’s a big deal because backlogs are basically the factory version of “we’re booked.”

Even better for future output as customers’ inventories stayed in “too low” territory (38.8). When shelves are light, companies usually restock, and that can keep production busy even if the pace cools a bit.

Raw Material Prices Suddenly Reheat

Now for the plot twist: factories may be growing, but they’re paying up to do it. The Prices index surged to 70.5, the highest since June 2022. That’s not subtle, it’s a cost flare up.

Respondents pointed to rising metals prices (think steel and aluminum) and tariff-related pressure showing up in supplier price notices. When input costs jump, companies either eat the margin hit, raise prices, or get creative with sourcing. None of those options are “free.”

Production Grows, Jobs Still Lag

Output stayed in expansion (Production 53.5), but momentum cooled from January. And hiring is still the weak spot: Employment improved to 48.8, yet remained in contraction, with many firms saying head-count management is still the norm.

Meanwhile, Supplier Deliveries slowed again (55.1), and Imports rose to 54.9. Put together, it reads like: demand is improving, supply chains are a bit stickier, and companies are staying careful about adding payroll.

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