A slight easing of the U.S. manufacturing contraction in February

According to statistics from a purchasing managers survey released on Wednesday, factory activity in the United States declined once more in February, but at a slower rate than in prior months as sluggish demand for goods continued to weigh on production.

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S&P Global's U.S. manufacturing PMI rose from 46.9 in January to 47.3 in February, but it declined from the flash reading of 47.8. Trade Algo surveyed economists who predicted that the index will end up at 47.8.

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Indicator readings below 50 for a fourth consecutive month indicate that the U.S. factory sector is still contracting, but readings that are closer to the no-change threshold indicate that the slump may have abated somewhat.

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"U.S. manufacturing remained under significant pressure in February," said Chris Williamson, chief business economist at S&P Global. Since 2009, the index has continued to indicate the sharpest decline outside of the Covid-19 pandemic lockdown months, according to him.

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According to S&P Global, the decline in activity was caused by continued decreases in output and new orders, with businesses attributing reduced new sales to client destocking.

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The concern is that new order inflows continue to decline sharply as many businesses report disappointing sales, which are partly attributed to a persistent trend toward cost-saving inventory reduction and low levels of confidence among their customers, both domestically and internationally, according to Mr. Williamson. "None of this suggests a stable economic environment."

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According to the poll, cost inflation at factories continued to decline, but the rate of charge inflation sharply increased as businesses tried to pass on greater costs to customers, suggesting that pricing pressures were still there.