US ISM PMI increased in February 2022.

 

The prices subindex had decreased slightly to 75.6 (-0.5) which still remained at an elevated high because of imported inflation and rising employment costs. In view of the rising inflation, the producers increased their inventories to 53.6 (+0.4) which boosted imports (55.4, +0.3) and local raw material (Est’d +0.1).

However, the supplier’s deliveries increased to 66.1 (+1.5) because of slower deliveries. The producers also had difficulties finding workers because of a huge job mismatch between job demand and supply. As a result, the producers were expected to increase their workers in the future as shown by the table below.

The producers ramped up their production (58.5, +0.7) to meet increasing orders but they still couldn’t fulfill the overwhelming orders. Thus, the customers’ inventories slumped further to 31.8 (-1.2). Furthermore, the backlog of order increased significantly (65, +8.6) because the producers couldn’t fulfill all the orders.

The new order (61.7, +3.8), new export order (57.1, +3.4) and new local order (Est’d +0.4) increased because customers were front-loading their orders due to rising inflation expectations.

Therefore, all these factors caused the PMI to increase 58.6 (+1) in February 2022. This front-loading phenomenon looks set to continue further because of the ongoing Russia-Ukraine war and the US PMI will continue expanding before declining. Overall, the US PMI is expected to have a downward trajectory in 2022.