The Institute for Supply Management’s (ISM) manufacturing index came in at 52.4 percent last month, down 0.2 percentage points from January’s reading.
But the figure, above the 50-percent mark separating growth from contraction, showed that the manufacturing sector remained in expansion overall.
Although US President Donald Trump had promised a manufacturing boom in his second White House term, the sector was rocked last year by his sweeping tariffs — and trade policy uncertainty.
ISM data showed that factory activity contracted for a 10th straight month in December before finally returning to expansion in January on improvements in new orders and production.
“Looking at the manufacturing economy, 21 percent of the sector’s gross domestic product (GDP) contracted in February, compared to 20 percent in January,” ISM survey chair Susan Spence said in a statement.
Businesses remained cautious too. A survey respondent in the transportation equipment sector said “American produced commodities like steel and aluminum are the highest priced in the world, by far.”
The respondent added that Trump’s sector-specific tariffs are “having the exact opposite effect of their intention on an American manufacturer like us: It is raising prices while lowering demand and profitability.”
Another respondent, in the chemical products industry, said: “Economic activity seems to be also challenging for this year.”
While there is recovery in some sectors, there remain a lot of “cost pressures and soft demand,” the respondent said.
In February, the new orders index was down 1.3-percentage points from the prior month at 55.8 percent.
The production index, meanwhile, was 2.4-percentage points lower than in January at 53.5 percent, ISM said.
While the employment index was up 0.7-percentage points in February at 48.8 percent, it remained in contraction.
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