U.S. Manufacturing Sector Expands for Second Straight Month but Growth Slows

Event summary

  • The ISM Manufacturing PMI® registered 52.4% in February 2026, down 0.2 percentage points from January, indicating continued but slower expansion.
  • New Orders and Production Indexes grew but at a slower pace, while Employment and Inventories remained in contraction.
  • Prices Index surged to 70.5%, the highest since June 2022, driven by rising steel and aluminum prices and tariffs.
  • Four of the six largest manufacturing industries (Chemical Products, Machinery, Transportation Equipment, and Computer & Electronic Products) expanded in February.

The big picture

The U.S. manufacturing sector's expansion in February 2026, though slower than January, signals ongoing economic growth. The surge in prices, driven by tariffs and rising raw material costs, poses a strategic challenge for manufacturers. The sector's ability to sustain growth amid these pressures will depend on managing cost efficiencies and navigating regulatory impacts. The overall economy has been expanding for 16 consecutive months, with the February PMI® indicating a 1.7% increase in real GDP on an annualized basis.

What we're watching

Tariff Impact
How Section 232 tariffs will continue to affect manufacturing costs and demand.
Price Pressures
Whether the surge in raw material prices will sustain or further accelerate.
Employment Trends
The pace at which manufacturing employment will recover from its 29-month contraction.