Breaking: ISM Manufacturing PMI increases to 47.7 in February vs. 48 expected


The economic activity in the US manufacturing sector continued to contract in February, albeit at a softer pace than it did in January, with the ISM Manufacturing PMI edging higher to 47.7 from 47.4. This reading came in below the market expectation of 48.

Underlying details of the report revealed that the Employment Index declined to 49.1 from 50.6 and the Prices Paid Index climbed to 51.3 from 44.5. Finally, the New Orders Index recovered to 47 from 42.5.

Commenting on the survey's findings, "new order rates remain sluggish due to buyer and supplier disagreements regarding price levels and delivery lead times; the index increase suggests progress in February," said Timothy R. Fiore, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

"Panelists’ companies continue to attempt to maintain head-count levels through the projected slow first half of the year in preparation for a stronger performance in the second half," Fiore added.

Market reaction

With the initial reaction the US Dollar Index inched slightly higher and was last seen losing 0.5% on the day at 104.42.

Meanwhile, the benchmark 10-year US Treasury bond yield advanced above 4% for the first time since early November, providing an additional boost to the US Dollar.


  • The Manufacturing PMI set to improve to 48.0 from 47.4, New Orders expected to rise to 43.7.
  • The ISM Prices Paid Index is seen a tad higher at 45.0 from 44.5 in the previous month.
  • Purchasing Managers’ Index will be released by the ISM on Wednesday at 15:00 GMT.

The main Manufacturing Purchasing Managers’ Index (PMI) in the United States will be released by the Institute of Supply Management (ISM) in its Report on Business, where the latest manufacturing business survey result is displayed, at 15:00 GMT this Wednesday.

What to expect from the ISM manufacturing PMI report?

The most important manufacturing PMI in the United States is anticipated to have edged up slightly to 48.0 in February from the 47.4 contraction registered in January.

Among the sub-components of the report, the focus will be on Prices Paid as it reflects business sentiment around future inflation. The Manufacturing Prices Paid sub-index is expected to improve from 44.5 in January to 45.0 during the reported month.

The Employment Index is also seen a tad higher at 51.0 in the second month of the year while the New Orders Index for February is expected to rise to 43.7 vs. January’s 42.5.

It’s worth noting that the US manufacturing contraction deepened in January, as the main index contracted for the third straight month and hit its lowest since May 2020.

The data will provide a fresh update on the manufacturing sector activity amid rising borrowing costs and growing doubts about a potential ‘soft-landing’, especially after Monday’s US Durable Goods Orders declined by 4.50% in January, compared to the -4.0% expectations and December’s increase of 5.10%.

Apart from the US economic data, the focus will also remain on the speeches from Federal Reserve policymakers, in the wake of heightened expectations of higher rates for longer amidst hot US inflation.

Wells Fargo’s research team forecasts a below-expectations report: 

“We expect to see that ISM manufacturing spent another month in contractionary territory, with only an improvement of one-tenth of a point to 47.5. Last month, new manufacturing orders fell to 42.5, the lowest reading since mid-2020. Orders are expected to continue to dry up and production is expected to slowly contract. At least prices paid fell and employment remains steady in the face of these issues. We will look for more disinflationary pressures and challenges to the labor market in this upcoming report.”

When will the ISM manufacturing Purchasing Managers’ Index report be released and how could it affect EUR/USD?

The ISM Manufacturing PMI report is scheduled for release at 15:00 GMT, on March 1. Ahead of the key release, the US Dollar holds near multi-week highs, keeping the EUR/USD depressed near the 1.0600 mark.

A stronger headline print will be enough to bolster bets for a 50 basis points (bps) Fed rate hike move in March. This, in turn, should help provide a fresh lift to the US Treasury bond yields and boost the US Dollar.

NatWest said on Monday that it now expects the Federal Reserve to raise interest rates by 50 bps at its March meeting following Friday's hot Personal Consumption Expenditures (PCE) data for January. The bank also expects 25 bps increments at the May and June meetings, which would take the terminal rate to 5.75%, up from their earlier estimate of 5.25%.

However, a softer report could act as a headwind to the ongoing bullish momentum in the US Dollar. A US Dollar correction is likely to ensue, initiating a meaningful recovery in the EUR/USD pair. Traders will also pay close attention to the ISM survey's forward-looking New Orders sub-index, the Prices Paid component and the measure of factory employment for a significant market impact.

Dhwani Mehta, Editor at FXStreet, offers a brief technical overview of the EUR/USD and writes: “The Relative Strength Index (RSI) indicator on the four-hour chart is looking to pierce the midline for the upside on Wednesday. Additionally, the EUR/USD pair has managed to find reclaim ground above the flattish 21-Simple Moving Average (SMA), now at 1.0580.”

Dhwani also notes important technical levels to trade the EUR/USD: “On the upside, downward-sloping 50 SMA at 1.0621 could lure buyers should the latest uptick gain traction. Further up, the multi-day high near 1.0650 could be challenged. 

“If the 21 SMA support fails, EUR/USD could resume its decline toward the 1.0550 psychological mark. The last line of defense for Euro bulls is foreseen at the 2023 low of 1.0533,” Dhwani adds further.

ISM manufacturing PMI-related content

About the US ISM manufacturing PMI

The ISM Manufacturing PMI, published by the Institute of Supply Management as a part of its Report on Business survey, offers records of how manufacturing business within the US evaluate current and future economic conditions. It is considered a big leading indicator on the US economic performance. The index reading above 50 suggests that production is increasing and typically benefits the US Dollar, while a number below 50 denotes contraction and typically caps the USD performance.

When will the next United States ISM Manufacturing PMI be released?

The following United States ISM Manufacturing PMI will be released on Friday, April 3rd, at 14:00 GMT

Stay tuned to all the upcoming events that may affect the markets on our economic calendar.

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