The Manufacturing ISM was above contraction in February, but barely. Not to worry, I hear things are going according to plan. 
Please consider the February 2025 Manufacturing ISM® Report On Business® .
Economic activity in the manufacturing sector expanded for the second month in a row in February after 26 consecutive months of contraction, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:
“The Manufacturing PMI® registered 50.3 percent in February, 0.6 percentage point lower compared to the 50.9 percent recorded in January. The overall economy continued in expansion for the 58th month after one month of contraction in April 2020,” says Fiore.
“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.”
Respondent Comments
- “The tariff environment regarding products from Mexico and Canada has created uncertainty and volatility among our customers and increased our exposure to retaliatory measures from these countries.” [Chemical Products]
- “Customers are pausing on new orders as a result of uncertainty regarding tariffs. There is no clear direction from the administration on how they will be implemented, so it’s harder to project how they will affect business.” [Transportation Equipment]
- “Tariff impact has been minimal to overall manufacturing and raw material supply. Limits on U.S. government spending in key organizations like the Food and Drug Administration, Environmental Protection Agency and National Institutes of Health are delaying some orders.” [Computer & Electronic Products]
- “Inflation and pricing pressure continue to drive uncertainty in our 2025 outlook. We are seeing volume impacts due to pricing, with customers buying less and looking for substitution options.” [Food, Beverage & Tobacco Products]
- “The incoming tariffs are causing our products to increase in price. Sweeping price increases are incoming from suppliers. Most are noting increases in labor costs. Vendors are indicating open capacity. Inflationary pressures are a concern. Our company is working diligently to see how the new tariffs will affect our business.” [Machinery]
- “Business is still slow, but some indications of improved demand are six to nine months out. Steel and scrap costs are increasing, and it’s too early to tell how high they will go.” [Fabricated Metal Products]
- “New orders continue to be strong after picking up in December. The uncertainty about tariffs keeps us cautious on spending, despite the strong sales right now.” [Electrical Equipment, Appliances & Components]
- “Management now has us running scenarios to project tariff impacts to our business. They want numbers in 24 hours on variables that equate to a wild guess. Interesting times we live in.” [Nonmetallic Mineral Products]
- “Internal analysis ongoing about impact of tariffs, but nothing concrete yet. General business conditions remain tepid; outlook on the durables side growing more pessimistic with growing domestic inventories of automobiles.” [Plastics & Rubber Products]
- “Customer volumes seem to be better than 2024. However, customers are still very hesitant to commit to long-term volumes due to the market uncertainty caused by proposed tariffs on steel/aluminum imports.” [Primary Metals]
Every comment mentioned tariffs, uncertainty, or price hikes related to Tariffs. Only one had the impact as minimal.
My favorite respondent comment regards nonmetallic minerals: They [management] want[s] numbers in 24 hours on variables that equate to a wild guess. Interesting times we live in.”
Commodities Up in Price, Down in Price, Short Supply
- Commodities Up in Price: Aluminum (15); Cocoa Beans; Copper; Electrical Components; Electronic Components; Labor — Temporary; Natural Gas (5); Plastic Resin; Polypropylene Resin; Solvents; Steel; Steel — Carbon; Steel — Hot Rolled; and Steel — Scrap (2).
- Commodities Down in Price: Ocean Freight.
- Commodities in Short Supply: Electrical Components (53).
The number of consecutive months the commodity is listed is indicated after each item.
Aluminum is up in price for 15 months and electrical components are short in supply for 53 months.
Things Are Going According to Plan
Q: What plan is that?
A: I am not privy to these discussions, but the logical conclusion is Trump wants a tariff-related recession to blame on Biden.
Q: What makes you think there is a plan?
A: Good point. Things are just going, there is no plan, just beliefs.
Q: What beliefs are those?
A: Trade wars are good and easy to win. We can use tariffs to balance the budget. We can use tariffs to bring manufacturing back to the US. We can use tariffs to lower inflation.
Q: Aren’t those somewhere between ridiculously contradictory and impossible?
A: Yes. But no one can admit that, silly. So we have to say that things are going to plan. This is 5D chess you know.
Related Posts
February 10, 2025: Trump to Impose 25 Percent Tariffs on Steel and Aluminum, Expect Higher Prices
All US consumers of steel and aluminum will pay higher prices, especially the automakers.
February 11, 2025: Trump’s Steel Tariffs Now Will Work as Good as the First Time
Q: How’s that? A: Very poorly.
February 17, 2025: Five Republican Senators Caution Trump about Pain from Tariffs
Senators warn Trump, but Trump won’t listen.
February 17, 2025: Trump’s Tariffs Will Increase the Cost of a Pickup Truck by $8,000.
Trump says it’s full speed ahead with tariffs. It will cost US jobs.
Jeff: “Have you seen the Atlanta FED’s GDP Now projection?”
Mish: I am very aware. And I will do a post on that soon. I need to look at the data before I comment. Writing a post on Construction Spending first.
It is bad, but not that bad.
I discussed why on the first plunge:
https://mishtalk.com/economics/gdpnow-nowcast-for-2025-q1-plunges-to-1-5-percent-on-trade-data/
Well, not just bad, but very bad.
This “Tariffs are beautiful” theme and planning is some of the most nonsensical shit coming out of TrumpCO.
How long is the recession predicted to last?
Probably as long as Trump’s tariffs last. But at the end of it all, America will be great again; according to Trump.
Mish. You have been documenting continued gradual weakening of the labor market and some other parts of the economy for some time. The recent drop in consumer confidence, plus reading into this current report a drop in business confidence, suggest to me we are heading into a classic “gradually and then suddenly” collapse. When people lose confidence they tend to only spend on essentials and put off discretionary and especially large purchases. It seems pretty likely we will be in a significant recession within a couple of months. Tariffs and inefficiencies related to all the knee jerk actions suggest inflation plus recession (“stagflation”) is not unlikely.
I don’t think it is going to be effective to blame this on Biden. If the current confusion continues much longer I think it is reasonable to expect the Republicans to lose both the house and senate in two years. Depending on how bad things get they could lose by a large margin.
I do not think Republicans lose the Senate. But I do expect them to lose the House.
ISM weak? During the golden age? No Way! Maybe that’s why Intel’s bigly hugely plant isn’t being built quick enough..
https://www.dispatch.com/story/news/2025/02/28/intel-ohio-chip-factory-delayed-new-albany/80732342007/
Check back in on 2031 and I bet you it won’t be built.
Agreed on it not getting built.
I would not be surprised in the least if Intel had a bankruptcy before then. They are dead man walking as there is no demand for their chips, especially the cutting edge ones.
Can you serve us a source for your conjecture?
By the way, one of my best friends was a TOP EXEC from AMAT (Applied Materials) and I am about to call him (he fell from a Bicycle down in San Luis Obispo and I hope he makes it – – he cracked his chin and hurt his neck and got all scraped up – – he is 85 years old).
He knows all of the top guys in the Silicon Valley, including Intel, and the other Chip guys and he is invested (his Family Office) in NVDA and he still owns a shit load of AMAT STOCK. He is a sharp guy, physically fit and you would never guess his age.
My pal will know what it up with these plant plans.
We had a long talk over Christmas and he took that fall late last week and we are going to drive down to see them in a week. It is so sad to see good people get hurt or sick.
Yep, I am an older guy and all of my oldest friends are getting ill or dying or hurt. Tough times.
I run a closed Facebook Group (invite only) where we study charts. I still own AMAT largely because of my pal.
Inflationary depression already?
Companies in the drone / missile sector of the mil-aerospace industry will be able to pass those tariffs along to taxpayers. Maybe Trump will hand out tax credits for that industry.
When the coffee runs out all productive activity will cease entirely.
Have you seen the Atlanta FED’s GDP Now projection? Take a look at that. No way to put charts up here. Fix that Mish. The Atlanta Fed GDPNow on Monday estimated that the U.S. economy will shrink at a 2.8% annualized rate in the first quarter of 2025
Natural Gas prices are up as demand is up. Exports hit a record of 15.6 bcfpd in February boosted by new units at the Venture Global Plaquemines plant. And last week, Cheniere began producing LNG at the new Stage 3 in Corpus Christi. LNG exports will continue to grow for the rest of the decade.
Fortunately, US natural gas production also hit a record 104.7 bcfpd in Feb.
If it wasn’t for the constant employment/tariff headlines, I might buy that Trump could blame Biden for any hypothetical recession.
As it is, though, he’s made a bunch of super controversial moves and (IMO) he’ll probably own the blame for any recession among most voters.
That’s very scary. Thank you for your work.