February PMI data from IHS Markit indicated a marked upturn
in the health of the U.S. manufacturing sector. Although the
rate of overall growth eased, it was the second-fastest since
April 2010 and was supported by sharp increases in output and
new orders. Unprecedented supply chain disruption remained
apparent, however, with supplier shortages and transportation
delays leading to a substantial rise in input costs. Firms were,
however, able to partially pass on input prices to clients through
the fastest increase in charges since July 2008.
At the same time, employment grew at the steepest rate since
September 2014, as business confidence also improved.
The seasonally adjusted IHS Markit final U.S. Manufacturing
Purchasing Managers’ Index™ (PMI™) posted 58.6 in February,
down from 59.2 in January but broadly in line with the earlier
released 'flash' estimate of 58.5. The marked improvement
in the health of the manufacturing sector was the second strongest
in almost 11 years.
Despite easing, rates of expansion in output and new orders
remained sharp overall in February. The rate of production
growth was among the fastest in six years while new order
growth was among the fastest seen over the past three years.
New export orders also rose solidly, registering the second steepest
gain since September 2014.
Also helping to buoy the headline PMI figure was a substantial
lengthening of supplier delivery times amid significant supply
chain disruption. Ordinarily a signal of improving operating
conditions, longer lead times for inputs reportedly stemmed
from supplier shortages and transportation delays due to
coronavirus disease 2019 (COVID-19) restrictions. The extent
to which wait times lengthened was the greatest since data
collection began in May 2007.
...meanwhile...
conomic activity in the manufacturing sector grew in February, with the overall economy notching a ninth consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.
The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:
"The February Manufacturing PMI® registered 60.8 percent, an increase of 2.1 percentage points from the January reading of 58.7 percent. This figure indicates expansion in the overall economy for the ninth month in a row after contraction in March, April, and May. The New Orders Index registered 64.8 percent, up 3.7 percentage points from the January reading of 61.1 percent. The Production Index registered 63.2 percent, an increase of 2.5 percentage points compared to the January reading of 60.7 percent. The Backlog of Orders Index registered 64 percent, 4.3 percentage points above the January reading of 59.7 percent. The Employment Index registered 54.4 percent, 1.8 percentage points higher from the January reading of 52.6 percent. The Supplier Deliveries Index registered 72 percent, up 3.8 percentage points from the January figure of 68.2 percent. The Inventories Index registered 49.7 percent, 1.1 percentage points lower than the January reading of 50.8 percent. The Prices Index registered 86 percent, up 3.9 percentage points compared to the January reading of 82.1 percent. The New Export Orders Index registered 57.2 percent, an increase of 2.3 percentage points compared to the January reading of 54.9 percent. The Imports Index registered 56.1 percent, a 0.7-percentage point decrease from the January reading of 56.8 percent."
Fiore continues, "The manufacturing economy continued its recovery in February. Survey Committee members reported that their companies and suppliers continue to operate in reconfigured factories. Issues with absenteeism, short-term shutdowns to sanitize facilities, and difficulties in hiring workers remain challenges and continue to cause strains that limit manufacturing-growth potential. Optimistic panel sentiment increased, with five positive comments for every cautious comment, compared to a 3-to-1 ratio in January. Demand expanded, with the (1) New Orders Index growing at a strong level, supported by the New Export Orders Index expanding at a faster rate, (2) Customers' Inventories Index remaining in 'too low' territory (at 32.5 percent, tying its all-time low), and the (3) Backlog of Orders Index growing 4.3 percentage points compared to January. Consumption (measured by the Production and Employment indexes) contributed positively (a combined 4.3-percentage point increase) to the Manufacturing PMI® calculation. Five of the top six industries reported moderate to strong expansion. The Employment Index expanded for the third straight month, but panelists continue to note significant difficulties in attracting and retaining labor at their companies and supplier facilities. Inputs — expressed as supplier deliveries, inventories and imports — continued to indicate input-driven constraints to production expansion, at higher rates compared to January, as indicated by the Inventories Index returning to contraction territory and another month of slowing supplier delivery performance. Imports marginally slowed in the period, driven by port backlogs. The Prices Index expanded for the ninth consecutive month, indicating continued supplier pricing power and scarcity of supply chain goods.
"Of the six biggest manufacturing industries, five — Chemical Products; Fabricated Metal Products; Transportation Equipment; Computer & Electronic Products; and Food, Beverage & Tobacco Products — registered strong growth in February. Petroleum & Coal Products moderately contracted.
"Manufacturing performed well for the ninth straight month, with demand, consumption and inputs registering strong growth compared to January. Labor-market difficulties at panelists' companies and their suppliers continued to restrict manufacturing-economy expansion and will remain the primary headwind to production growth until employment levels and factory operations can return to normal across the entire supply chain," says Fiore.
Of the 18 manufacturing industries, 16 reported growth in February, in the following order: Textile Mills; Electrical Equipment, Appliances & Components; Primary Metals; Paper Products; Chemical Products; Machinery; Fabricated Metal Products; Transportation Equipment; Wood Products; Plastics & Rubber Products; Computer & Electronic Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Furniture & Related Products; and Nonmetallic Mineral Products. The two industries reporting contraction in February are: Printing & Related Support Activities; and Petroleum & Coal Products.
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