There’s some good news and some bad news in the manufacturing industry.
According to a report from Reuters, U.S. manufacturing activity grew steadily in February, but prices at the factory gate raced to a near 3½-year high amid tariffs, highlighting upside risks to inflation even before a U.S.-led attack on Iran sent oil prices rocketing.
The surge in input prices at factories reported by the Institute for Supply Management on Monday and jump in oil prices following attacks by the United States and Israel, which killed Iran’s Supreme Leader Ayatollah Ali Khamenei, and retaliation by Tehran, bolstered economists’ expectations that the Federal Reserve would not cut interest rates for a while, Reuters reported.
“The surge in the prices paid index will raise some eyebrows at the Fed, however, as it suggests further goods inflation pressures were in the pipeline even before factoring in the surge in oil prices due to events in the Middle East,” Thomas Ryan, a North America economist at Capital Economics, told the outlet.
The ISM said its manufacturing PMI was little changed at 52.4 last month compared to a reading of 52.6 in January. It was the second straight month that the PMI was above the 50 level, which indicates expansion. Economists polled by Reuters had forecast the PMI falling to 51.8. Factory activity rebounded in January after 10 consecutive months in contraction territory.
Reporting growth were 12 industries, including primary metals, machinery, electrical equipment, appliances and components, as well as transportation equipment, miscellaneous manufacturing and computer and electronic products reported growth. Among the five that contracted were furniture and related products, and food, beverage and tobacco products.
