U.S. manufacturing showed cautious strength in February 2025, continuing a modest expansion trend amid a complex economic backdrop. Key indicators point to the sector growing at its fastest pace in nearly three years, reflecting an economy that remains on an expansionary footing.
However, new policy developments—notably a revival of import tariffs by the incoming administration—have introduced significant uncertainty and cost pressures. Survey data reveals mounting concerns over tariffs and inflation, as rising input prices and longer delivery times hint at nascent supply chain stress. At the same time, corporate America is doubling down on domestic manufacturing, as evidenced by several high-profile factory investment announcements this month.
A Month in Data
Both major purchasing manager indices signaled continued (if fragile) expansion in February. The S&P Global US Manufacturing PMI climbed to 52.7 (seasonally adjusted) in February, up from 51.2 in January. This marked a second consecutive month above the neutral 50 level and the highest PMI value since mid-2022, indicating the strongest improvement in factory conditions in over two and a half years.
The ISM Manufacturing PMI similarly registered 50.3%, signaling slight growth, though it actually eased from 50.9% in January. Notably, January had been the ISM index’s first move into expansion territory since October 2022, aided in part by factories rushing orders ahead of anticipated tariff changes.
What the Data Means
The latest data contains several key takeaways for U.S. manufacturing. First, the sector’s recovery is real but fragile. After a prolonged slump, American factories managed to expand output for a second straight month—a positive sign that the worst of the downturn is over. However, February’s growth appears transitory, largely driven by “front-loading” behavior ahead of new tariffs.
Manufacturers and their customers pulled forward purchases and production to avoid higher costs later. This behavior gave a short-term jolt to PMI readings (and likely boosted inventory levels), but it borrows from future demand. The abrupt drop in ISM new orders and the caution voiced by purchasers suggest that in March and April, we could see payback—slower orders and output as the pipeline catches up.
Fundamentally, underlying demand for manufactured goods is not surging; consumer spending and business investment have been lackluster entering 2025. Thus, absent the tariff effect, the data might have shown a flat or even contracting manufacturing sector. The takeaway: February’s expansion, while welcome, should be interpreted carefully—it does not yet signal a robust upswing, but rather a fragile stabilization buoyed by one-off factors.
New Factory and Manufacturing Announcements
February 2025 saw a flurry of major manufacturing investment announcements, signaling confidence in the sector’s future and the impact of pro-industrial policies. Below, we highlight five significant new factory projects unveiled during the month, spanning high-tech electronics, automotive supply chain, consumer goods, and more:
Apple’s $500 Billion U.S. Investment
Tech giant Apple Inc. announced an unprecedented commitment of $500 billion to U.S. manufacturing over the next four years—its largest-ever domestic investment. As part of this plan, Apple and its partners will open a new 250,000 sq. ft. server production facility in Houston, Texas by 2026 to build cutting-edge AI servers. The broader initiative will also double Apple’s U.S. advanced manufacturing fund to $10 billion and create a workforce training academy in Detroit.
In total, Apple estimates the investment will create around 20,000 jobs across the country. This massive pledge is widely seen as a response to the onshoring push—helping Apple localize production of critical hardware and avoid tariffs on imported tech components. It underscores a major trend of the month: global companies deepening their manufacturing roots in the U.S.
TSMC’s $100 Billion Chip Facilities
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, revealed plans for a $100 billion investment in the United States to expand semiconductor production. In a high-profile announcement alongside President Trump, TSMC’s CEO detailed a project to build five new facilities, including three cutting-edge chip fabrication plants (fabs), two advanced packaging facilities, and a major R&D center.
This expansion, which comes on top of TSMC’s ongoing fab construction in Arizona, is aimed at bolstering domestic chip supply and reducing dependence on Asian production. While a precise timeline was not given, the company indicated the effort would roll out over the coming years and would generate an estimated 40,000 construction jobs in the next four years.
ArcelorMittal’s $1.2 Billion Steel Plant
Global steelmaker ArcelorMittal announced it is investing $1.2 billion to build a new steel manufacturing facility in Calvert, Alabama. The plant will produce up to 150,000 tons per year of non-grain-oriented electrical steel (NOES), a high-grade steel used in electric vehicle motors, transformers, and generators. Construction is slated to begin in the second half of 2025, with production starting by 2027.
The project is expected to create over 200 permanent manufacturing jobs once operational, in addition to about 1,300 construction jobs during the build-out phase. This investment will significantly expand U.S. capacity for electrical steel and reduce reliance on imports of this critical material. It is a strategic move aligning with both market demand (surging EV production) and national policy goals to secure domestic supply chains for essential materials.
First Quality Tissue’s $984 Million Paper Plant
In the paper and consumer products sector, First Quality Tissue – a leading manufacturer of hygiene and paper goods – announced plans to establish a $984 million ultra-premium tissue and towel plant in Ohio. The company has selected a site in Defiance, Ohio for a new 1.6 million-square-foot production facility, which will produce high-end paper towels and tissue products.
The plant will feature two state-of-the-art thru-air-dried (TAD) paper machines (a technology that improves efficiency and softness) and is expected to create more than 400 full-time jobs with an annual payroll of $22.5 million by 2032. According to the announcement, the first paper machine is slated to begin operations in 2028, with a second to follow about 18 months later. This is a major investment in domestic paper product manufacturing at a time when demand for premium tissue is growing.
Diageo’s $415 Million Beverage Facility
Global spirits producer Diageo North America unveiled plans to build a $415 million manufacturing and warehousing facility in Montgomery, Alabama. Dubbed “Diageo Montgomery,” the new site will span 360,000 square feet and serve as a production and distribution hub for Diageo’s premium beverage brands in the U.S. Southeast. The facility will have a multi-million-case bottling and packaging capacity, enabling Diageo to supply products like Guinness stout and Johnnie Walker whiskey more efficiently to the region.
The project is currently underway and is expected to be fully operational by the second half of 2025. It will deliver approximately 100 full-time manufacturing jobs when running, and about 750 construction jobs during the build. This plant will join Diageo’s other North American production sites and is part of the company’s broader program to expand capacity and modernize its operations for future growth.
Future Outlook
February 2025 can be seen as a pivotal moment: a month where U.S. manufacturing demonstrated resilience and the beginnings of growth, yet also encountered new hurdles that it must surmount. The coming months will be telling—if the sector can absorb the tariff shock, stabilize costs, and maintain even slight expansion, it will build confidence that the recovery is on track.
By late 2025, with new factories coming online and possibly easier macroeconomic conditions, the outlook brightens considerably. Industry professionals should plan for a bumpy short ride but keep focus on the long game, where opportunities in a restructured and reinvigorated U.S. manufacturing landscape are abundant. The data and developments of February highlight both the pitfalls to avoid and the path to follow for sustained industrial growth in the United States.
