The overall economy grew for the forty-fifth straight time, while the manufacturing sector expanded for the third month, the Institute for Supply Management reported Friday.
According to the ISM's monthly report on business, the ISM index climbed to 54.2 in February from 53.1 in January.
Economists polled by Thomson Reuters predicted the index would slip to 52.5.
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.
"The PMI registered 54.2 percent, an increase of 1.1 percentage points from January's reading of 53.1 percent, indicating expansion in manufacturing for the third consecutive month," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. "This month's reading reflects the highest PMI since June 2011, when the index registered 55.8 percent. The New Orders Index registered 57.8 percent, an increase of 4.5 percent over January's reading of 53.3 percent, indicating growth in new orders for the second consecutive month. As was the case in January, all five of the PMI's component indexes — new orders, production, employment, supplier deliveries and inventories - registered in positive territory in February. In addition, the Backlog of Orders, Exports and Imports Indexes all grew in February relative to January."
The closely watched prices paid index increased to 61.5 from 56.5. The employment index slipped to 52.6 from 54.0 the prior month.
The production index increased to 57.6 from 53.6, the new orders index grew to 57.8 from 53.3; the supplier deliveries index dipped to 51.4 from 53.6; the export orders index grew to 53.5 from 50.5; and the imports index rose to 54.0 from 50.0.
The inventories index rose to 51.5 from 51.0; the customers' inventories index fell to 46.5 from 48.5; and backlog of orders soared to 55.0 from 47.5.
Respondents' comments included:
"Automotive is still going strong, which allows budgeting for capital equipment." (Machinery)
"Overall business is good." (Food, Beverage & Tobacco Products)
"Starting to pick up after a slower than normal year-end." (Miscellaneous Manufacturing)
"Continuing slowdown in defense spending." (Computer & Electronic Products)
"More RFQs coming in than the past three months." (Nonmetallic Mineral Products)
"Workload is growing; need qualified machinists." (Fabricated Metal Products)
"Europe is still a concern in the auto sector." (Transportation Equipment)
"Business seems to be on an uptick. The normal seasonal downturn for us has been much shorter and not as severe as in the past four years." (Furniture & Related Products)
"Demand indicators are robust. Supply is constrained. Pricing is escalating." (Wood Products)
"Customer demand has softened. At first, that decline was consistent with seasonal patterns but has persisted beyond historical periods." (Chemical Products)
