The nation’s manufacturing sector expanded in February for the 26th consecutive month, and the overall economy grew for the 69th straight month, according to The Institute for Supply Management’s latest report.
The ISM’s manufacturing PMI index shows a dip of 0.6% from January to 52.9%, slowing to its lowest rate in 13 months. The number came in shy of expectations of 53.1 by Reuters analysts, and was the lowest in January 2014. Any number above 50 shows improvement in the manufacturing sector.
“ISM’s February report is fairly consistent with recent government data showing manufacturing output increasing at a moderate pace,” noted Don Norman, director of economic studies for the MAPI Foundation. “The Federal Reserve Board’s industrial production index for manufacturing increased by just 0.2% in January. On a year-over-year basis, however, manufacturing output was up 5.6%. The U.S. Census Bureau reported that new orders for manufactured goods (excluding defense) increased by 3% in January while shipments of durable goods were down by 1.5% and unfilled orders decreased by 0.9%.
Most of the more than 50 index segments fell in February led by employment which lost 3%. Part of the dip is being blamed on the West Coast port strike and a harsh winter, although it’s tough to gauge just how big an impact was made.
According to Norman, “Other factors that contributed to slower growth include continued sluggish growth in Europe, and the rise in the value of the dollar against the euro. Lower gasoline and heating prices have spurred consumer spending and are a net plus for the economy. However, some of this increased spending has been reflected in rising imports rather than domestically produced goods. In addition, lower prices of crude oil and natural gas are curtailing development activity, which in turn is reducing the demand for manufactured products used in such development.”
The ISM's summary report is below:
The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. "The February PMI® registered 52.9%, a decrease of 0.6 percentage point from January’s reading of 53.5%. The New Orders Index registered 52.5%, a decrease of 0.4 percentage point from the reading of 52.9% in January. The Production Index registered 53.7%, 2.8 percentage points below the January reading of 56.5%. The Employment Index registered 51.4%, 2.7 percentage points below the January reading of 54.1%. Inventories of raw materials registered 52.5%, an increase of 1.5 percentage points above the January reading of 51%. The Prices Index registered 35%, the same percentage as in January, indicating lower raw materials prices for the fourth consecutive month. Comments from the panel express a growing level of concern over the West Coast dock slowdown, negatively impacting exports and imports and requiring workarounds and added costs."
Follow the link to read the ISM’s full report:
