The US manufacturing sector continued expanding in February but at a slower pace compared to the previous month, according to the Institute for Supply Management (ISM) on Monday.

The Manufacturing PMI landed at 50.3%, down from January’s 50.9%, still signaling expansion. New orders and production went back into contraction, with the New Orders Index dropping 6.5 percentage points (pp) to 48.6%. The Employment Index slipped 2.7 pp month on month, to 47.6%. The Production Index declined from 52.5% recorded in January to 50.7% in February. Meanwhile, the Prices Index surged 7.5 pp, monthly, to 62.4%.

"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. Although tariffs do not go into force until mid-March, spot commodity prices have already risen about 20 percent," ISM Chair Timothy Fiore noted.