Manufacturing Growth Continues Recovery into February

Manufacturing growth rose for 33rd consecutive month; NAM encouraged by improvement, but remains cautious

Economic activity in the manufacturing sector grew in February for the 33rd consecutive month, while the overall economy grew for the 52nd consecutive month, according to the latest Manufacturing ISM Report on Business®. The Purchasing Managers Index (PMI) rose 1/9% in February to 56.7%, compared to January's seasonally adjusted rating of 54.8%.

The manufacturing sector gained momentum in February as the New Orders, Production, Employment and Inventories Indexes contributed to a faster rate of growth in the Purchasing Managers Index (PMI). New Orders were up 3.9% and manufacturing employment was up 3.7%.

On the down side, the Supplier Deliveries Index slowed offsetting a portion of the overall improvement. prices, driven by volatility in energy markets, continue to be a major source of concern for the Institute of  Supply Management's (ISM) survey respondents.

Commenting on the growth figures, National Association of Manufacturers' economist Chi Nguyen noted that the "healthy gain" in manufacturing reversed a three-month trend when manufacturing activity measured by the PMI was cooling. 

"Manufacturing's steady recovery appears to be staying on track as this is the 33rd consecutive month that the manufacturing index has stayed above 50," said Nguyen. An index above 50 indicates growth; and index below 50 indicates a decline.

Although the manufacturing employment index offers hope that the Labor Department's employment numbers for March will show an increase in factory jobs, "consumer confidence was significantly down last month and energy prices continue to take a toll on the overall economy, so manufacturing's uphill struggle will continue for awhile before anyone decides to celebrate," noted Nguyen.

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