US manufacturing expanded at its fastest pace since mid-2022 in February, according to the latest S&P Global US Manufacturing PMI, which rose from 51.2 in January to 52.7.
The report shows the accelerated sector recovery driven by stronger new orders and increased production. This marks the second consecutive month of expansion, coinciding with Donald Trump's return to presidency.
Another report from the Institute for Supply Management (ISM) offered a more careful view, with its PMI slipping from 50.9 to 50.3, new orders signed and employment declined. However, ISM still confirmed two months of expansion and broke a 26-month contraction under Biden. ISM reading also shows a slower recovery than expected, not reaching the Economist's 50.6 expectations.
After years of stagnation, the US manufacturing sector has shown new strength under President Trump's leadership. The most recent data shows a reversal from the long-term contraction in Biden's terminology. Companies are responding to policy changes aimed at strengthening domestic industries, securing supply chains and encouraging investments.
S&P Global vs. ISM: More accurate photos of US manufacturing?
S&P Global PMI is investigating a wider range of companies, including small and medium-sized manufacturers, who are often sensitive to economic conditions. ISM research is skewed towards larger companies, which can be hard to grasp the reality for small manufacturers.
Another important difference is global and US-centric data. S&P Global explicitly asks businesses to report only US operations, but ISM does not impose this limit. In other words, some responses may reflect global circumstances rather than purely domestic activities.
S&P Global's PMI has historically been more stable thanks to a larger sample size of over 1,300 companies for ISM's 600-700 respondents, and has been better correlated with Federal Reserve manufacturing data.
Although ISM data is more volatile, both reports confirm the overall manufacturing expansion. S&P Global shows a stronger and more sustained recovery.
The expansion of manufacturing, but tariff uncertainty is looming
Both reports show manufacturing growth, but S&P Global suggests a more resilient sector as businesses increase production and front-load purchases ahead of expected tariffs.
At the same time, price pressure is rising. The ISM price index surged to 62.4 at 7.5 points, reflecting the inflationary pressures of raw materials such as steel and aluminum. S&P Global reported a sharp rise in factory prices in two years as suppliers handed the manufacturers high costs. The Fed's interest rate cuts at the end of last year may have also rekindled inflation, with recent price reports from the Ministry of Labor and the Ministry of Commerce showing increased inflationary pressures.
Despite concerns about rising costs, both reports show that major industries, including oil, food and chemicals, expanded in February. These industries are the focus of the Trump administration's economic agenda, contributing to the stability of the domestic energy security and supply chain.
Furthermore, growth in oil, food and chemical production could help ease consumer inflation and stabilize prices of essential products, even as other manufacturing inputs become more expensive.
