If you're making stuff, you're trying to figure out the tariff impact

The February ISM manufacturing index was 50.3, down from 50.9 in January and just below the estimate of 50.7 but at least holding the 50 level for a 2^nd month after 26 months below 50. After 3 months above 50, new orders fell 6.5 pts to 48.6. Backlogs remained below 50 but less so at 46.8, up 1.9 pts.

We had a rush of imports as seen with Friday’s goods data in January and the February inventory number here rose 4 pts to 49.9, though not above 50. And likely there has been some supply chain/shipping delays as supplier deliveries roes 3.6 pts to 54.5 (means slower deliveries), the highest since August 2022. Prices paid jumped by 7.5 pts to 62.4, the most since June 2022. 14 industries said they paid more vs 11 in January and 7 in December. Specifically, “Mill materials (steel, aluminum and copper), food elements, plastics and natural gas registered increases similar to the prior month. The plastics increase reversed a decline.” And, 31% of companies reported higher prices in February, compared to 21% in January.”

With supplier deliveries, 9 industries experienced slower times, the most since September 2022.

With that drop in new orders, “Panelists noted a weakening level of demand performance…Orders have also been impacted by discussions of which party will pay for potential tariff costs, causing a slowing in order placement. In addition, there is diminished confidence not only in additional interest rate cuts, but also the decline in long term rates, affecting durable goods and construction activity.”

Employment dropped by 2.7 pts to 47.6 after a brief stint above 50 last month. The ISM said, “Panelists are continuing to release employees as the business environment becomes more unclear.” Export orders fell 1 pt to 51.4, but remaining above 50 “as panelists’ comments cited Chinese stimulus impacts and potential counter tariffs levied by Beijing and Europe.”