February 2023 Manufacturing ISM Report On Business Indicates the Sector Contracted for the Fourth Consecutive Month

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected. Economic activity in the manufacturing sector contracted in February for the fourth consecutive month following a 28-month period of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The U.S. manufacturing sector contracted in February, as the Manufacturing PMI registered 47.7 percent, 0.3 percentage point higher than the reading of 47.4 percent recorded in January. This is the fourth month of slow contraction and continuation of a downward trend that began in June 2022.

ISM’s New Orders Index contracted for the sixth consecutive month in February, registering 47 percent, an increase of 4.5 percentage points compared to January’s reading of 42.5 percent.

The Production Index registered 47.3 percent in February, 0.7 percentage point lower than the January reading of 48 percent, indicating a third month of contraction after 30 consecutive months of growth.

ISM’s Employment Index registered 49.1 percent in February, 1.5 percentage points lower than the January reading of 50.6 percent. The index indicated employment contracted after weak expansion in the previous two months and contraction in the three months before that.

The delivery performance of suppliers to manufacturing organizations was faster for a fifth straight month in February, as the Supplier Deliveries Index registered 45.2 percent, 0.4 percentage point lower than the 45.6 percent reported in January.

The Inventories Index registered 50.1 percent in February, 0.1 percentage point lower than the 50.2 percent reported for January. Manufacturing inventories expanded at a slower rate compared to January.

ISM’s Backlog of Orders Index registered 45.1 percent in February, a 1.7-percentage point increase compared to January’s reading of 43.4 percent, indicating order backlogs contracted for the fifth consecutive month after a 27-month period of expansion.

The four manufacturing industries that reported growth in February are: Apparel, Leather & Allied Products; Transportation Equipment; Petroleum & Coal Products; and Electrical Equipment, Appliances & Components. The 14 industries reporting contraction in February, in the following order, are: Printing & Related Support Activities; Paper Products; Wood Products; Textile Mills; Furniture & Related Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Chemical Products; Primary Metals; Computer & Electronic Products; Fabricated Metal Products; Machinery; and Miscellaneous Manufacturing.