The February 2026 ISM Manufacturing PMI came in at 52.4 — the second consecutive month above 50, which means the manufacturing sector is technically in expansion for the first time since late 2024. That’s good news. The backlog of orders index hit 56.6%, the highest reading since May 2022. Shops that were sitting on stalled order books are finally seeing work come in.
Here’s the catch: the prices paid index surged to 70.5 — the highest level since June 2022, up 11.5 points from January. The primary driver is tariffs. Steel and aluminum prices are up sharply (25% and 10% tariffs respectively), and that’s flowing through to everything from raw material costs to the price of new capital equipment.
So you have a situation where demand is growing and order books are filling up — but the cost of doing that work is rising at the same time. For a shop owner trying to decide whether to add capacity, that’s a complicated picture. Let me try to make it a little clearer.
What the Numbers Actually Say
| ISM Index | Feb 2026 Reading | Jan 2026 Reading | What It Means |
|---|---|---|---|
| Manufacturing PMI | 52.4% | 52.6% | Expansion (above 50) — 2nd consecutive month |
| New Orders | 54.5% | 55.1% | Growing — customers placing new work |
| Production | 54.7% | 52.5% | Accelerating — shops running harder |
| Employment | 47.6% | 50.3% | Contracting — hiring caution despite demand |
| Backlog of Orders | 56.6% | 51.6% | Highest since May 2022 — work is stacking up |
| Prices Paid | 70.5% | 59.0% | Surging — tariffs biting into input costs |
| Supplier Deliveries | 54.5% | 54.1% | Slowing slightly — supply chain tightening |
The employment number is worth noting. Despite growing orders and a rising backlog, shops are not hiring aggressively. That tells you something: manufacturers are trying to absorb the new demand with existing headcount before committing to payroll costs in an uncertain tariff environment. Which also means they’re looking at productivity — at getting more output per operator, per shift, per machine.
What a Surging Prices-Paid Index Means for Equipment Decisions
When input prices jump the way they did in February, shops feel it on two fronts simultaneously: the cost of the raw material they’re machining goes up, and the cost of the machines they’d buy to machine it goes up as well. Most CNC machines sold in the US — Mazak, DMG Mori, Okuma, Fanuc-based machines from Japan and Germany — carry tariff exposure through their components even when assembled domestically.
I’ve had multiple conversations in the last few weeks with shop owners who were planning to buy new equipment and are now reconsidering. The math that worked at last year’s new machine prices doesn’t necessarily work at today’s. A Citizen swiss lathe that was priced at $230,000 six months ago might be quoted at $255,000 or more today, depending on configuration and delivery timing.
That’s not a sales pitch for used equipment — it’s just the reality of where new machine prices are trending. Used machines were already priced before the latest tariff rounds. They don’t carry that additional markup. For a shop that needs capacity now and is watching every dollar, the price gap between new and used has widened in the last 90 days.
The Backlog Situation: Why This Matters for Capacity Decisions
A backlog of orders index at 56.6% is significant. It’s the highest reading in nearly four years and it’s trending upward. When order backlogs grow, shops face a choice: turn down work, extend lead times, or add capacity. None of those options are free, but the third one — adding capacity — is the only one that actually grows the business.
The timing question is always tricky. You don’t want to buy equipment right before a demand slowdown. But a rising backlog combined with two consecutive months of manufacturing expansion suggests this isn’t a one-month blip. The shops I’m talking to that are taking the backlog seriously and adding capacity now — even modestly — are the ones positioned to handle the work when it keeps coming.
| Scenario | Risk if Wrong | What We’re Seeing |
|---|---|---|
| Wait — demand softens before you buy | You bought at the top; utilization suffers | Possible, but PMI and backlog say otherwise |
| Buy now — demand sustains | You captured market share; machine pays off faster | More consistent with current data |
| Buy now — demand softens temporarily | Short-term underutilization; you still own the asset | Manageable, especially on a used machine at lower capital outlay |
| Wait — demand sustains, costs keep rising | You paid more for the machine later and missed revenue | Real risk given current tariff trajectory |
The Practical Takeaway
If your shop is sitting on a growing backlog and you’ve been putting off an equipment decision, February’s ISM data is worth taking seriously. The sector is expanding, order books are full, and the price of new machines is moving against you.
That doesn’t mean you should panic-buy. It means the case for a thoughtful capacity addition — particularly on the used market, where pricing hasn’t moved the way new machine prices have — is stronger right now than it’s been in a while. We have CNC lathes, machining centers, and turning equipment in stock and ready to ship. Financing is available on an application-only basis through six-year terms.
If you want to talk through what makes sense for your specific situation, reach out. That’s what we’re here for.
Frequently Asked Questions
What is the ISM Manufacturing PMI and why does it matter?
The ISM Manufacturing Purchasing Managers’ Index (PMI) is a monthly survey of purchasing managers at manufacturing companies across the US. A reading above 50 indicates expansion; below 50 indicates contraction. It’s one of the most closely watched leading indicators for the US manufacturing sector because it reflects actual activity — orders placed, production run, materials purchased — rather than lagging economic data. For shops making capital equipment decisions, it’s a useful signal about where the broader industry is headed.
How do tariffs affect the price of new CNC machines?
Most CNC machine tools sold in the US are manufactured in Japan, Germany, Taiwan, or South Korea. Even machines assembled in the US often use imported components. Tariffs on steel and aluminum increase the cost of manufacturing those machines, and import tariffs on finished equipment add further cost at the border. Those increases are generally passed on to buyers. The result is that new machine prices in early 2026 are meaningfully higher than they were 12–18 months ago for comparable equipment.
Does buying used CNC equipment make more sense when new prices are rising?
In general, yes — the price gap between new and used widens when new machine prices increase. Used machines were priced before the latest tariff rounds took effect, so they don’t carry that additional premium. For shops that don’t need the absolute latest features and are primarily focused on productive capacity, a well-maintained used machine from 2015–2020 often delivers comparable output at 30–50% of the new machine price.
