NEW YORK – U.S. manufacturing increased in February, reaching its highest level since May 2004, according to the Institute for Supply Management.
The overall economy grew for the twenty-first straight time, while the manufacturing sector expanded for the nineteenth time, ISM reported Tuesday.
According to the ISM’s monthly report on business, the ISM index gained to 61.4 in February from 60.8 in January.
Economists polled by Thomson Reuters predicted the index would rise to 61.0.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
“February’s report from the manufacturing sector indicates continuing strong performance as the PMI registered 61.4 percent, a level last achieved in May 2004," said Norbert J. Ore, chair of the Institute of Supply Management's manufacturing business survey committee. “New orders and production, driven by strength in exports in particular, continue to drive the composite index (PMI). New orders are growing significantly faster than inventories, and the Customers’ Inventories Index indicates supply chain inventories will require continuing replenishment. The Employment Index is above 60 percent for only the third time in the last decade. While there are many positive indicators, there is also concern as industries related to housing continue to struggle and the Prices Index indicates significant inflation of raw material costs across many commodities.”
The closely watched prices paid index grew to 82.0 from 81.5. The employment index was at 64.5, up from 61.7 the prior month.
The production index increased to 66.3 from 63.5, the new orders index rose to 68.0 from 67.8; the supplier deliveries index jumped to 59.4 from 58.6; the export orders index increased to 62.5 from 62.0; and the imports index remained 55.0.
The inventories index decreased to 48.8 from 52.4; the customers’ inventories index fell to 40.0 from 45.5; and backlog of orders increased to 59.0 from 58.0.
Respondents’ comments included:
“A continued weak dollar is increasing the cost of components purchased overseas. It is going to force us to increase our selling prices to our customers.” (Transportation Equipment)
“We continue to see significant inflation across nearly every type of chemical raw material we purchase.” (Chemical Products)
“Our plants are working 24/7 to meet production demands.” (Fabricated Metal Products)
“Prices continue to rise, while business limps along at last year’s pace.” (Nonmetallic Mineral Products)
“Overall demand is off 10 percent.” (Plastics & Rubber Products)
