Manufacturing hit the accelerator in February, with new orders, production and employment all contributing to a strengthening economy, the Institute for Supply Management said today.
The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, surged to 60.8 percent. That was up from 58.7 percent in January and compares with a 12-month average of 54 percent.
February was “a very strong month,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call. “Manufacturing is doing really well.”
The PMI is based on a survey of supply executives across 18 industries. The institute said 16 industries experienced expansion, including textiles, primary metals, machinery, fabricated metal products, transportation equipment and miscellaneous manufacturing.
The two industries reporting contraction last month included petroleum & coal products. Fiore said on the conference call that sector was showing signs of improvement toward the end of February.
An index level above 50 percent indicates economic expansion. Below that mark indicates contraction. The PMI has been in positive territory for nine straight months. Both February and December 2020 had index readings above 60 percent. The last month with a PMI below 50 percent was May 2020.
The PMI is considered a leading economic indicator and a barometer of where the manufacturing economy is headed.
Manufacturing overall has been improving since the COVID-19 pandemic forced factory shutdowns starting in March 2020. Plants reopened with new safety procedures.
Last month, ISM’s New Orders Index registered 64.8 percent, up from 61.1 percent in January. The institute said 13 industries reported increases in new orders. Only one industry, miscellaneous manufacturing, reported a decline in orders.
The group’s Production Index was 63.2 percent in February, up from 60.7 percent the month before. Fourteen industries reported gains in output, with only two reporting production declines.
ISM’s Employment Index was 54.4 percent, up from 52.6 percent in January. The institute said 11 industries reported job gains, with four reporting employment declines.
Fiore said manufacturers are having trouble finding enough workers.
“The need for labor continues to hold back production levels,” he said.