The U.S. manufacturing sector expanded for the second consecutive month in February 2025, following 26 months of contraction. However, the effects of newly imposed tariffs were felt throughout the industry.
The Details: According to the Institute for Supply Management, February's Manufacturing PMI fell to 50.3%, down from 50.9% in January, below market expectations of 50.5% as tracked by Trading Economics.
Overall demand weakened in February, new orders and employment contracted and production growth decelerated sharply. The impact of new tariffs drove prices higher at the fastest pace since June 2022, according to Trading Economics.
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Four of the six largest manufacturing industries, Petroleum & Coal Products, Food, Beverage & Tobacco Products, Chemical Products and Transportation Equipment, reported growth for the month.
"Demand eased, production stabilized, and destaffing continued as panelists' companies experience the first operational shock of the new administration's tariff policy. Prices growth accelerated due to tariffs, causing new order placement backlogs, supplier delivery stoppages and manufacturing inventory impacts," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.
Market Reactions
All 3 major indices are red in early trading Monday as the deadline for additional tariffs looms later in the week.
The SPDR S&P 500 ETF Trust (NYSE:SPY), tracking the S&P 500, was down 0.26% at $592.66 and the Invesco QQQ Trust (NASDAQ:QQQ), tracking the Nasdaq 100 index, was down 0.31% at $506.57 at the time of publication.
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