Incoming tariffs weighed on US manufacturing activity in February, according to data released by the Institute for Supply Management (ISM), while price growth accelerated.

ISM’s manufacturing PMI registered a reading of 50.3 in February, down from January’s 50.9 reading and below the 50.7 economists had expected, Yahoo Finance’s Josh Schafer reports.

“Demand eased, production stabilized, and destaffing continued as panelists’ companies experience the first operational shock of the new administration’s tariff policy,” ISM Chair Timothy Fiore wrote in the release. “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.”

Meanwhile, S&P Global’s final reading of manufacturing PMI was more upbeat, coming in at 52.7 in February, its highest level since June 2022.

But despite the reading coming in better than expected, S&P Global Market Intelligence chief business economist Chris Williamson noted respondents became less optimistic about the year ahead.

“Business optimism about the year ahead has consequently fallen compared to the buoyant mood evident in January,” Williamson said in the release, “with February seeing an increase in the number of companies citing concerns over tariffs and other policies introduced by the new Trump administration.”

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