Economic activity in the manufacturing sector expanded in February, according to the latest Manufacturing Report on Business from the Institute for Supply Management (ISM).
"February proved to be a good month
in the manufacturing sector as new orders, production and employment contributed to a solid growth scenario," said ISM Chairman Norbert Ore.
The monthly survey showed significant reduction in manufacturers' inventories for the second consecutive month, with resumed growth of the order backlog. Although the prices manufacturers pay is at the highest level in five months, Ore said price concerns are minimal because the number of commodities involves is still relatively small. "The trend in manufacturing, as well as the overall economy, is for low but continuing growth," he said.
ISM's Purchasing Managers Index (PMI) composite index registered 52.3 percent in February, up 3 points from January's seasonally adjusted 49.3 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding. A PMI in excess of 41.9 percent over time generally indicates overall economic expansion. Average PMI for the last 12 months has been 53.1 percent. The lowest reading during that time was 49.3 percent.
"The past relationship between the PMI and the overall economy indicates that the PMI average for January and February (50.8 percent) corresponds to a 2.8 percent increase in real gross domestic product annually," Ore said. "In addition, if the PMI for February is annualized, it corresponds to a 3.2 percent increase in real GDP annually."
The full study is available at www.ism.ws.