WASHINGTON, D.C.: US manufacturing activity expanded in February for the sixth consecutive month as businesses reported strong sales and demand, the Institute for Supply Management said Wednesday.
The ISM purchasing managers index rose 1.7 percentage points to 57.7 percent, the highest reading since August 2014 and well above the consensus estimate among economists, who expected a smaller increase to just 56.1 percent.
The new orders index, one of the key subcomponents, of the PMI surged to 65.1 percent, from 60.4 percent in the previous month, the highest since December 2013.
Bradley J. Holcomb, chair of ISM’s business survey committee, said the strong numbers over many months reflect the current positive sentiment about the economy.
“There is growing confidence in manufacturing growth,” he told reporters in a conference call. Comments from the businesses surveyed were “very largely positive.”
Holcomb said manufacturing is a leading indicator for the economy and the result in the overall index would correlate to economic growth of 4.5 percent over the longer term “if the whole economy begins to respond as manufacturing has responded.”
He cautioned, however, that companies are watching prices, which have been increasing for 12 consecutive months and “if left unchecked would lead to inflationary pressures.”
The prices index slowed in the month to 68 percent from 69 percent, but still indicates increasing costs.
The production index hit its highest point since March 2011, rising 1.5 points to 62.9 percent, with 14 industries reporting stronger growth and only three indicating output is slowing.
However, the employment index slipped nearly two points to 54.2, although that still indicates job growth in the sector with 10 of the 18 industries surveyed saying hiring rose in the month.