US February final S&P Global manufacturing PMI 52.7 vs 51.6 prelim

• Prelim was 51.6
• January final was 51.2

There was some real optimism in January as prospects for the year ahead hit the highest in three years and that continued into February despite some turmoil around tariffs. However the comments in the report suggest the strength was driven by inventory building ahead of tariffs.

Chris Williamson, Chief Business Economist at S&P
Global Market Intelligence

“A rise in the PMI to a 32-month high signals an
improvement in the health of the manufacturing sector
which may only be skin deep.

“Although manufacturing production grew at the
strongest rates since May 2022 and new orders
increased at the best pace in a year, there’s much to
suggest that this improvement could be short lived.
Production and purchasing were often buoyed by
companies and their customers building inventory to
beat price hikes and supply issues caused by tariffs.
Exports have meanwhile slumped and supplier delivery
delays were the most common since October 2022 amid
disruptions to trade caused by tariff worries.

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

“Worries have noticeably swelled in relation to the
inflationary impact of tariffs, which were widely reported
as having caused factory input costs to spike higher in
February. These higher costs are being passed on to
customers, resulting in the strongest factory gate price
inflation recorded for two years, which manufacturers
fear may in turn not only damage sales in the coming
months but also encourage the Fed to take a more
hawkish view of inflation.”

The ISM manufacturing report is due at the top of the hour (along with construction spending).

This article was written by Adam Button at www.forexlive.com.