U.S. ISM Manufacturing Index (February 2026)

ISM Manufacturing Index Shows Price Pressures Surging in February

• The ISM Manufacturing Index edged down slightly in February to 52.4 from 52.6, less than the consensus expectation. It remained in expansion for a second straight month, confirming that January’s rebound was not a one off. 
• Growth across industries broadened modestly, with 12 of 18 sectors reporting expansion. Only about 21% of manufacturing GDP remained in contraction, little changed from January and far improved from late 2025 conditions.
• Demand indicators cooled but stayed in expansionary territory. New orders eased to 55.8 and production slowed to 53.5, but both remained above the expansion threshold of 50. In contrast, backlog of orders surged to 56.6, the strongest reading since mid 2022.
• Trade-related components continued to improve at the margin. New export orders remained in expansion, while imports jumped sharply, suggesting firms are pulling in inputs amid ongoing supply and cost uncertainty.
• Price pressures jumped up sharply, with the prices index jumping to 70.5, up from 59.0 in January. Today's reading is the highest level since June 2022, reflecting rising metals costs, tariffs, and lingering supply constraints.

Key Implications

• The February report confirms that U.S. manufacturing has moved into expansion, but momentum is no longer accelerating. Softer readings for new orders and production suggest that January marked a high point for growth, with activity now settling into a more moderate and uneven recovery. That said, the continued expansion signals a meaningful improvement from the prolonged contraction seen through much of 2025.
• The sharp jump in the prices index is the most important development. The details of the release show renewed input cost pressures—driven by metals prices, tariffs, and supply constraints—which could squeeze margins and limit the durability of the recovery, or lead to a rise in consumer prices. This inflationary signal will surely give the Federal Reserve pause about cutting rates in the near-term. Combined with falling employment, this points to a manufacturing sector that is growing cautiously rather than confidently.

Disclaimer

This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.