February 2024 Manufacturing ISM Report On Business Reports Manufacturing Continues Its Path of Contraction

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 16th consecutive month following one month of “unchanged” status (a PMI reading of 50 percent) and 28 months of growth prior to that, 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 47.8 percent, down 1.3 percentage points compared to January’s reading of 49.1 percent. This is the 16th consecutive month of contraction.

ISM’s New Orders Index contracted for the 18th time in 20 months in February, registering 49.2 percent, a decrease of 3.3 percentage points compared to January’s reading of 52.5 percent.

The Production Index moved back into contraction territory in February, registering 48.4 percent, 2 percentage points lower than the January reading of 50.4 percent. The Production Index has been in contraction in 11 of the last 15 months.

ISM’s Employment Index registered 45.9 percent in February, 1.2 percentage points lower than the January reading of 47.1 percent. The index indicated employment contracted for the fifth month in a row (and at a faster rate in February) after one month of expansion.

Delivery performance of suppliers to manufacturing organizations was slower in February after 16 straight months in “faster” territory for the Supplier Deliveries Index, which registered 50.1 percent, 1 percentage point higher than the 49.1 percent reported in January.

The Inventories Index registered 45.3 percent in February, 0.9 percentage point lower than the 46.2 percent reported in January. Manufacturing inventories contracted at a slightly faster rate compared to the previous month.

ISM’s Backlog of Orders Index registered 46.3 percent, a 1.6-percentage point increase compared to January’s reading of 44.7 percent, indicating order backlogs contracted for the 17th consecutive month after a 27-month period of expansion.

The eight manufacturing industries reporting growth in February — in order — are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Primary Metals; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Miscellaneous Manufacturing; and Transportation Equipment. The seven industries reporting contraction in February — in the following order — are: Furniture & Related Products; Machinery; Wood Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Paper Products; and Electrical Equipment, Appliances & Components.