The Institute for Supply Management (ISM) has released its manufacturing report for February. The purchasing managers index (PMI) report showed that manufacturing expanded at a slower rate, with new orders, production and employment making up that slower growth.

The manufacturing index fell to 54.2 in February from 56.6 in January. While this still maintains the growth streak of two and a half years, the reading was under the Dow Jones (WSJ) consensus estimate of 55.6.

Any reading above 50 is representative of expansion or growth. Readings below 50 represent contraction.

The Production Index led the largest part of decline here with a 54.8 reading in February, versus a 60.5 reading in January. New Orders also contracted to a level of 55.5 from 58.2 the prior month. The Inventories Index rose to 53.4 in February from January’s 52.8 reading.

The Employment Index contracted to 52.3 in February from 55.5 in January. The Prices Index remained under 50, at 49.4 in February, compared with 49.6 in January.

Manufacturing businesses have concerns about the global economic growth story and are still concerned about import taxes and tariffs. All but two of the 18 industries reported overall growth in February. The sector showing an outright contraction was in non-metallic minerals.

The ISM statement of the manufacturing purchasing managers index said:

Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month. Demand expansion continued with the New Orders Index reaching the mid-50s, the Customers’ Inventories Index scoring lower and remaining too low, and the Backlog of Orders returning to a low 50’s expansion level. Consumption (production and employment) continued to expand, but fell a combined 8.9 points from the previous month’s levels. Inputs — expressed as supplier deliveries, inventories and imports — stabilized at a mid 50’s level and had a slight negative impact on the PMI. Inputs continue to reflect an easing business environment, confirmed by Prices Index contraction… Exports continue to expand, at slightly stronger rates compared to January. The manufacturing sector continues to expand, but inputs and prices indicate easing of supply chain constraints.

The Dow Jones industrial average had been up just over 200 points earlier in the morning, but it was last seen up 75 points at 25,991. The yield on the 10-Year Treasury note was last seen up two basis points at 2.73%.

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