The fall in the ISM manufacturing index in February likely marks the beginning of the end of the recent mini renaissance, as the reality of the disruption to the sector caused by tariffs (including retaliatory action by trading partners) starts to set in. The impact of new country- and product-specific tariffs is already visible with the prices paid index surging to its highest level since June 2022. This supports our view that there will be a goods-driven resurgence in core inflation in the second half of the year.
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