Economic activity in the manufacturing sector expanded in February for the 26th consecutive month, and the overall economy grew for the 69th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
… “The February PMI® registered 52.9 percent, a decrease of 0.6 percentage point from January’s reading of 53.5 percent.
The New Orders Index registered 52.5 percent, a decrease of 0.4 percentage point from the reading of 52.9 percent in January. The Production Index registered 53.7 percent, 2.8 percentage points below the January reading of 56.5 percent.
The Employment Index registered 51.4 percent, 2.7 percentage points below the January reading of 54.1 percent. Inventories of raw materials registered 52.5 percent, an increase of 1.5 percentage points above the January reading of 51 percent. The Prices Index registered 35 percent, 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.”
Of the 18 manufacturing industries, 12 are reporting growth in February in the following order: Paper Products; Printing & Related Support Activities; Furniture & Related Products; Primary Metals; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Fabricated Metal Products; Machinery; Transportation Equipment; Electrical Equipment, Appliances & Components; and Chemical Products. The three industries reporting contraction in February are: Textile Mills; Apparel, Leather & Allied Products; and Computer & Electronic Products.
Yahoo’s Business Calendar has a Briefing.com prediction of 51.0 percent, while the “Market Expects” figure is 53.0 percent.
Expansion is expansion (anything about 50%), so in that sense we’ll take it. Backlog of Orders returned to expansion (51.5%) after seriously contracting (46.0%) in January.
That said, the modest drop in New Orders and more significant drop in Production, two of the three primary GDP drivers, are not comforting.
Zero Hedge has noted that the “Markit” version of PMI seems artificialy high.