US manufacturing grew, input costs soared before Iran attack

Published Tue, Mar 3, 2026 · 06:03 AM

[WASHINGTON] US manufacturing expanded in February but input prices soared at the fastest pace since 2022, stoking fears of an inflation resurgence even before this weekend’s attacks on Iran.

The Institute for Supply Management’s (ISM) gauge of prices paid for manufacturing inputs jumped 11.5 points to 70.5, the highest level since overall inflation peaked nearly four years ago.

The figures out Monday (Mar 2) reflected responses ahead of US and Israeli airstrikes on Iran this past weekend. The war has all but halted oil tanker traffic through the Strait of Hormuz and pushed crude prices sharply higher.

The conflict also risks tempering a nascent recovery in manufacturing. ISM’s measure of factory activity was little changed at 52.4, indicating a second month of growth at one of the highest readings in recent years. Orders and production growth remained solid.

Treasury yields rose following the report. The S&P 500 remained lower.

The group’s price gauge is likely to remain elevated or even push higher over the near-term after oil prices jumped on Monday by the most since early 2022, following Russia’s invasion of Ukraine.

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Higher energy prices represent the latest cost challenge for manufacturers. If sustained, producers may have little choice but to raise prices for their business customers and consumers.

The impact from the Middle East turmoil will depend on how the duration of the conflict and where primary materials are sourced, said Susan Spence, chair of the ISM Manufacturing Business Survey Committee.

“It really does depend on the sector and where they are importing their raw materials from,” Spence said on a call with reporters. “In general, the supply managers have yet another challenge on their hands.”

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Producer price data out last week showed the cost of unprocessed goods, minus food and energy, rose more than 15 per cent in January from a year ago, the steepest annual gain since April 2022. A Bloomberg index of metals, including copper and aluminium, has also increased sharply this year.

The assortment of recent price data along with geopolitics point to a steady undercurrent of inflation for US producers, which is being partially fed by higher import duties from the Trump administration. It also explains why US Federal Reserve policymakers are in little rush to lower interest rates after three straight cuts at the end of 2025. BLOOMBERG

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When is the US ISM Manufacturing PMI data and how could it affect EUR/USD?

US ISM Manufacturing PMI Overview

The United States (US) Institute of Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) data for February is due for release today at 15:00 GMT.

The ISM report is expected to show that the manufacturing sector activity expanded again, but at a moderate pace. The Manufacturing PMI is at 51.8, down from 52.6 in January. Last month, manufacturing sector activity expanded for the first time after remaining below 50.0 for a straight 10 months, a figure that separates expansion from contraction.

Apart from the Manufacturing PMI, investors will also focus on sub-components of the data, such as Employment Index, Prices Paid, and New Orders Index. ISM Manufacturing Prices Paid – which reflects changes in expenditure for inputs such as labor and raw materials – is estimated higher at 59.5 from the previous reading of 59.0.

Weaker-than-projected US ISM Manufacturing PMI data would prompt expectations for interest rate cuts by the Federal Reserve (Fed), as policymakers remain concerned over the economic outlook. On the contrary, higher figures would diminish them.

How could US PMI data affect EUR/USD?

EUR/USD trades 0.75% lower at around 1.1730 at the press time. The near-term bias turns mildly bearish as spot slips below the 20-day Exponential Moving Average near 1.1800.

The 14-day Relative Strength Index (RSI) has retreated further towards 40.00 after failing to return above 60.00, indicating selling pressure at higher levels. Fresh bearish momentum would appear if the RSI breaks below 40.00.

Immediate support emerges at the trend-line break area around 1.1645, with a clear violation exposing the mid-1.15 region and then the 1.1489 origin of the uptrend. On the upside, initial resistance stands at the 20-day EMA around 1.1800, followed by the recent swing highs at 1.1880 and then the 1.2030 peak, which caps the broader bullish structure and would need to give way to negate the current corrective tone.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

ISM Manufacturing PMI

The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US manufacturing sector. The indicator is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that factory activity is generally declining, which is seen as bearish for USD.

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