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Manufacturing Reaches Best Level in 30 Months, ISM Says

Bill Koenig
By Bill Koenig Senior Editor, SME Media

US manufacturing strengthened in February, attaining its best level in 30 months, the Institute for Supply Management said today.

The Tempe, AZ-based group said in a monthly report that its PMI, which measures economic activity in manufacturing, rose to 57.7% last month from 56% in January. It was the highest PMI since August 2014, when the index reached 57.9%. February was also the sixth consecutive monthly increase for the index.

“I don’t see why we can’t continue this kind of pace over the next several months,” Bradley Holcomb, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call with reporters.

The PMI was bolstered by gains in orders and manufacturing output. The group’s New Orders Index was 65.1%, the highest since December 2013 and its Production Index was 62.9%, the highest since March 2011.

The ISM report is based on a survey of 350 purchasing and supply executives in 18 industries. A reading above 50% indicates expansion and below 50% contraction. The The PMI has been above 50% for 11 of the past 12 months and averaged 52.8% during that period.

Widespread Expansion

For the February PMI, 17 of the 18 surveyed industries reported expansion, including textiles, machinery, primary metals, fabricated metal products, transportation equipment, miscellaneous manufacturing and petroleum and coal products. The only industry reporting contraction was furniture.

“We continue to see strength around the auto industry,” said Steve Menaker, industry leader for consulting firm RSM US (Chicago). There is, he said, “at least the feel of sustained demand for automobiles.” The energy sector may improve “as oil prices firm up,” Menaker said.

ISM said 16 of the 18 industries reported gains in new orders, including primary metals, machinery transportation equipment, fabricated metal products, miscellaneous manufacturing and petroleum and coal products. No industry reported a decrease in orders last month, the group said.

With the Production Index, 14 industries had higher output, including machinery, primary metals, transportation equipment, fabricated metal products, miscellaneous manufacturing and petroleum and coal products.

The group’s Employment Index softened last month but was still in positive territory. The index was 54.2%, down from 56.1% in January. ISM said 10 industries had job gains, including machinery and petroleum and coal products. Five industries reported job cuts, including miscellaneous manufacturing and transportation equipment.

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