ISM Manufacturing PMI — February 2025
Headline: The ISM Manufacturing PMI fell 0.6 point to 50.3, indicating continued expansion—its second consecutive month above the 50 breakeven—at a slower rate. The reading was above its trailing six-month average of 48.2 and within the 46.5–50.9 six-month range. Manufacturing remained in expansion, while the broader economy was also growing relative to its 42.3 breakeven threshold.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo |
|---|---|---|---|---|---|
| New Orders | 48.6 | 55.1 | -6.5 | Contracting | below avg (49.3) |
| Production | 50.7 | 52.5 | -1.8 | Growing | above avg (48.4) |
| Employment | 47.6 | 50.3 | -2.7 | Contracting | above avg (46.3) |
| Supplier Deliveries | 54.5 | 50.9 | 3.6 | Slowing | 6-mo high |
| Inventories | 49.9 | 45.9 | 4 | Contracting | above avg (46.5) |
| Customers' Inventories | 45.3 | 46.7 | -1.4 | Too Low | 6-mo low |
| Prices | 62.4 | 54.9 | 7.5 | Increasing | 6-mo high |
| Backlog of Orders | 46.8 | 44.9 | 1.9 | Contracting | 6-mo high |
| New Export Orders | 51.4 | 52.4 | -1 | Growing | above avg (48.4) |
| Imports | 52.6 | 51.1 | 1.5 | Growing | 6-mo high |
Key moves:
- New Orders fell back below 50 to 48.6 from 55.1, crossing from expansion into contraction and moving below its six-month average.
- Supplier Deliveries rose to a six-month high of 54.5, while Prices reached a six-month high of 62.4.
- Customers’ Inventories fell to a six-month low of 45.3, indicating exceptionally lean downstream stocks; Employment also crossed below 50 to 47.6.
Insights:
- The demand signal weakened materially: New Orders contracted even as Production remained marginally above 50 at 50.7. That combination points to limited near-term production momentum and helps explain the simultaneous decline in Employment to 47.6.
- Manufacturers’ Inventories improved 4.0 points to 49.9, but remained just below 50 while New Orders fell sharply. The move therefore looks less like deliberate stocking against stronger demand and more like a potential inventory adjustment risk if orders remain weak.
- Customers’ Inventories at 45.3, a six-month low, are “too low” in ISM terms and are a constructive reorder signal. However, the benefit is tempered by Backlog of Orders remaining in contraction at 46.8, despite improving to a six-month high.
- Supplier Deliveries at 54.5—the highest in six months—indicate slower deliveries, consistent with either firmer demand or supply constraints. With Imports also at a six-month high of 52.6, supply-chain activity is elevated rather than slack.
- Prices accelerated to 62.4, well above the six-month average of 52.5 and the prior 54.9. The sharp rise increases input-cost and goods-inflation pressure, with potential implications for manufacturer margins.
Breadth & prices: All 10 listed industries reported growth, with zero reporting contraction. Input prices increased at a faster rate, reflected in the Prices index rising to 62.4.
Takeaway: February confirms a fragile manufacturing recovery: the headline remained above 50 and above its six-month average, but forward demand and employment deteriorated sharply. Lean customer inventories and broad industry growth offer support, while contracting orders/backlogs and a six-month-high prices reading create a weaker-growth, higher-cost macro mix.