U.S. manufacturing activity expanded steadily in February, but input prices rose to the highest level in nearly 3-1/2 years, raising potential inflation risks. The Institute for Supply Management's manufacturing PMI was little changed at 52.4, compared to 52.6 in January. This is the second consecutive month that the PMI indicates an expansion. The rebound in factory activity in January was attributed to reordering after the holiday season and anticipated price increases due to ongoing tariff issues. Despite this, manufacturing employment has declined by 83,000 jobs since January 2025. Economists predict that tax legislation will support manufacturing this year.