The Institute for Supply Management (ISM) has released its monthly Purchasing Managers Index (PMI) for February, and the story told is another positive one with the PMI at 57.7%, a slight increase from the January reading of 56%.
A reading above 50% indicates the manufacturing economy is generally expanding; below 50% indicates it is generally contracting.
A PMI above 50%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the February PMI indicates growth for the 93rd consecutive month in the overall economy, and indicates growth in the manufacturing sector for the sixth consecutive month.
According to ISM Chair Bradley J. Holcomb, “Comments from the panel [of respondents] largely indicate strong sales and demand, and reflect a positive view of business conditions with a watchful eye on commodities and the potential for inflation.”
The New Orders Index registered 65.1%, an increase of 4.7 percentage points from the January reading of 60.4%. The Production Index registered 62.9%, 1.5 percentage points higher than the January reading of 61.4%. The Employment Index registered 54.2%, a decrease of 1.9 percentage points from the January reading of 56.1%. Inventories of raw materials registered 51.5%, an increase of 3 percentage points from the January reading of 48.5%. The Prices Index registered 68% in February, a decrease of 1 percentage point from the January reading of 69%, indicating higher raw materials prices for the 12th consecutive month.
Of the 18 manufacturing industries, 17 reported growth. This number is way up from December’s growth-reporting 10 sectors. The growth-reporting sectors for last month in the order from greatest to least are as follows: Textile Mills; Apparel, Leather & Allied Products; Machinery; Computer & Electronic Products; Primary Metals; Plastics & Rubber Products; Nonmetallic Mineral Products; Chemical Products; Paper Products; Fabricated Metal Products; Transportation Equipment; Food, Beverage & Tobacco Products; Wood Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Petroleum & Coal Products; and Miscellaneous Manufacturing.
The only industry reporting contraction in February is Furniture & Related Products.
Further commentary and the full report are available at this link.