Manufacturing Sample Reports Show Continued Strong Growth

Growth eased very slightly over the last two weeks of the PMI manufacturing sample with the final February reading at 55.3 vs 55.9 for the mid-month flash and compared with January's 55.5. Despite the month-end slowing, the month's results are among the best of the last three years.

New orders, the most important of any reading, lead the strength with a 13-month high while production and employment held solid and business confidence, though still below the long-term average, improved.

Prices are a key signal of strength in today's report with input costs running at a 5-year high and selling prices at a 4-year high. Another sign of capacity stress is delivery times with delays at a 3-year high.

These results point to a strong first-quarter start for the factory sector though the directional signal does contrast with definitive data on the sector which opened January on a weak note, specifically declines in January durable goods orders and no change for manufacturing in January's industrial production report.

...meanwhile...

No sample has been reporting consistently stronger results than ISM manufacturing where the composite index rose to 60.8 in February, easily topping Econoday's high estimate and the strongest reading in 14 years.

Strength lies in new orders, at 64.2, which are filling backlogs which are at 59.8 for another 14-year high. The need to keep up with orders is triggering new hiring among the sample with employment at 59.7. Export orders are key for the sample, up 3 points in the month to 62.8 which is a 7-year high. And orders for imports are also very elevated, at 60.5 and an 11-year high.

Capacity stress is evident with delays at 61.1 for an 8-year high. Prices are another sign of stress with input costs at 74.2, up 1.5 points and the most severe reading in seven years.

This sample, in contrast to actual data from the government that are comparatively flat, continues to carve out one of its very strongest runs in 70 years of data.