February Manufacturing PMI Highest In Nearly 14 Years

February's Purchasing Manager Index from the Institute of Supply Management jumped a healthy 1.7 points from January to its highest mark since May 2004, the latest evidence that U.S. manufacturing is at its strongest level since before the Great Recession.

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TEMPE, AZ — Economic activity in the manufacturing sector expanded in February, and the overall economy grew for the 106th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

The report was issued Thursday by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee:

  • The February PMI registered 60.8 percent, an increase of 1.7 percentage points from the January reading of 59.1 percent
  • The New Orders Index registered 64.2 percent, a decrease of 1.2 percentage points from the January reading of 65.4 percent
  • The Production Index registered 62 percent, a 2.5 percentage point decrease compared to the January reading of 64.5 percent
  • The Employment Index registered 59.7 percent, an increase of 5.5 percentage points from the January reading of 54.2 percent
  • The Supplier Deliveries Index registered 61.1 percent, a 2 percentage point increase from the January reading of 59.1 percent
  • The Inventories Index registered 56.7 percent, an increase of 4.4 percentage points from the January reading of 52.3 percent
  • The Prices Index registered 74.2 percent in February, a 1.5 percentage point increase from the January reading of 72.7 percent, indicating higher raw materials prices for the 24th consecutive month.

“This indicates growth in manufacturing for the 18th consecutive month at strong levels led by continued expansion in new orders, production activity, employment and inventories, with suppliers continuing to struggle delivering to demand," Fiore said. "The PMI at 60.8 percent is the highest level of expansion seen since May 2004, when it reached 61.4 percent."

September 2017's PMI originally registered at 60.8, but was revised down to 60.2 due to seasonal adjustment factors.

Comments from the panel reflect expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a faster rate to support production; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in February. Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across most industry sectors. The Customers’ Inventories Index indicates levels remain too low. Capital expenditure lead times improved by five days while production material supplier lead times extended four days during the month of February.

Of the 18 manufacturing industries, 15 reported growth in February, in the following order: Printing & Related Support Activities; Primary Metals; Machinery; Computer & Electronic Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Transportation Equipment; Textile Mills; Miscellaneous Manufacturing; Paper Products; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products. Two industries reported contraction during the period: Apparel, Leather & Allied Products; and Furniture & Related Products.

MANUFACTURING AT A GLANCE
February 2018

Index Series Index Feb Series Index Jan Percentage Point Change Direction Rate of Change Trend* (Months)
PMI 60.8 59.1 +1.7 Growing Faster 18
New Orders 64.2 65.4 -1.2 Growing Slower 26
Production 62.0 64.5 -2.5 Growing Slower 18
Employment 59.7 54.2 +5.5 Growing Faster 17
Supplier Deliveries 61.1 59.1 +2.0 Slowing Faster 17
Inventories 56.7 52.3 +4.4 Growing Faster 2
Customer Inventories 43.7 45.6 -1.9 Too Low Faster 17
Prices 74.2 72.7 +1.5 Increasing Faster 24
Backlog of Orders 59.8 56.2 +3.6 Growing Faster 13
New Export Orders 62.8 59.8 +3.0 Growing Faster 24
Imports 60.5 58.4 +2.1 Growing Faster 13
OVERALL ECONOMY Growing Faster 106
Manufacturing Sector Growing Faster 18

Manufacturing ISM Report On Business data is seasonally adjusted for the New Orders, Production, Employment and Supplier Deliveries Indexes.
*Number of months moving in current direction.
Indexes reflect newly released seasonal adjustment factors.

THE LAST 12 MONTHS
Month PMI
February 2018 60.8
January 2018 59.1
December 2017 59.3
November 2017 58.2
October 2017 58.7
September 2017 60.2
August 2017 58.8
July 2017 56.3
June 2017 57.8
May 2017 54.9
April 2017 54.8
March 2017 57.2

source: tradingeconomics.com
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