February S&P Global US Manufacturing PMI™: Softest Decline in 3 Months

This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at Advisor Perspectives/VettaFi.

The February S&P Global US Manufacturing PMI™ hit a 3-month high coming in at 47.3, up 0.4 from the final January figure, and slightly worse than the Investing.com forecast of 47.8. This marks the fourth consecutive month in contraction territory, a streak we have not seen since 2020.

Here is an excerpt from Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, in the latest press release:

“US manufacturing remained under intense pressure in February. Although the PMI rose slightly, it continues to signal the steepest downturn outside of pandemic lockdown months since 2009.

“Moreover, some of the improvement in output could merely be attributed to faster supplier delivery times, which quickened to the greatest extent since 2009 to facilitate higher production and enable factories to work through previously placed orders. The worry is that new order inflows continue to fall sharply as many companies report disappointing sales, linked in part to a sustained trend towards cost-saving inventory reduction and low levels of confidence at their customers, both at home and abroad. None of this points to a healthy economic situation.

“There was some brighter news in that factory jobs growth picked up slightly amid reports of greater success in filling vacancies, and the improvement in supply chains helped reduce input cost inflation. However, rising wage pressures and efforts to raise margins meant average prices for goods leaving the factory gate rose sharply once again, the rate of inflation accelerating for a second straight month to hint at stubbornly high price pressures.” [Press Release]

The S&P Global US Manufacturing PMI™ measures the activity level of purchasing mangers in the manufacturing sector through a questionnaire of ~800 manufacturers. The reported headline number is a weighted average of New Orders, Output, Employment, Suppliers' Delivery Time, and Stocks of Purchases. The S&P Manufacturing PMI is a diffusion index, meaning that a reading above 50 indicates expansion in the sector and a reading below 50 indicates contraction.