US Manufacturing Strong, Input Prices at Highest Since 2022
The United States manufacturing sector returned to expansion in February, but one signal immediately alarmed the market: input costs rose the fastest since 2022. This means factories are indeed operating, but price pressures are starting to build again.
The Institute for Supply Management (ISM) Prices Paid Index jumped 11.5 points to 70.5, the highest level since peak inflation a few years ago. A rise this sharp is usually read as an early warning that production costs could spill over into selling prices.
On the activity front, the ISM manufacturing index remained relatively stable at 52.4—marking the second consecutive month in expansion and one of the best levels since 2022. New orders and production remained solid, so the factory economy appears to be starting to heat up again.
However, this report came just before a weekend spike in energy risk, when Middle East conflict sparked concerns about disrupted oil pipelines and pushed crude prices sharply higher. If energy prices remain high, the ISM cost indicator has the potential to remain high—and even rise again—because energy is a cost component that quickly spreads across many sectors.
As a result, manufacturers could face a difficult choice: curb margins or pass on costs to business and consumer customers. Previous producer price data also showed strong increases in raw material costs (excluding food and energy), while industrial metal prices also rose—adding to pressure on the input side.
On the operational side, the ISM noted longer supplier delivery times and a rise in backlogs, signaling that supply chain and tariff adjustments are still causing friction. Meanwhile, manufacturing employment is still shrinking, but the pace is slowing—the employment index rose to 48.8, the highest in a year—with the market awaiting official payroll data due Friday.
Source: Newsmaker.id
