PMI at 57.7% in February Manufacturing ISM Report On Business

Tempe, Arizona – Economic activity in the manufacturing sector expanded in February, and the overall economy grew for the 93rd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The report was issued by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee: "The February PMI registered 57.7%, an increase of 1.7 percentage points from the January reading of 56%. The New Orders Index registered 65.1%, an increase of 4.7 percentage points from the January reading of 60.4%. The Production Index registered 62.9%, 1.5 percentage points higher than the January reading of 61.4%. The Employment Index registered 54.2%, a decrease of 1.9 percentage points from the January reading of 56.1%. Inventories of raw materials registered 51.5%, an increase of 3 percentage points from the January reading of 48.5%. The Prices Index registered 68% in February, a decrease of 1 percentage point from the January reading of 69%, indicating higher raw materials prices for the 12th consecutive month. Comments from the panel largely indicate strong sales and demand, and reflect a positive view of business conditions with a watchful eye on commodities and the potential for inflation."

Of the 18 manufacturing industries, 17 reported growth in February in the following order: textile mills; apparel, leather & allied products; machinery; computer & electronic products; primary metals; plastics & rubber products; nonmetallic mineral products; chemical products; paper products; fabricated metal products; transportation equipment; food, beverage & tobacco products; wood products; electrical equipment, appliances & components; printing & related support activities; petroleum & coal products; and miscellaneous manufacturing. The only industry reporting contraction in February is furniture & related products.

What respondents are saying
"Medical device manufacturing is still strong." (Miscellaneous Manufacturing)

"Business [is] improving and lead times are extending by two or more weeks." (Chemical Products)

"Very positive outlook for this quarter. Production goals have been adjusted multiple times and increased each time due to demand." (Computer & Electronic Products)

"Product demand continues to be solid." (Plastics & Rubber Products)

"Bookings are heavy early in the season. Expect robust first half of the year." (Primary Metals)

"Demand still outstrips capacity. Competitors have announced heavy capital investments to increase capacity." (Food, Beverage & Tobacco Products)

"Sales and business continue to be strong and increasing." (Machinery)

"Business holding steady in Q1." (Transportation Equipment)

"Even though oil and gas prices are on the upswing, we still face a tough 2017 and will continue to save on costs." (Petroleum & Coal Products)

"Major focus on commodities and potential [for] further inflation." (Electrical Equipment, Appliances & Components)

February 2017 manufacturing index summaries
PMI
Manufacturing expanded in February as the PMI registered 57.7%, an increase of 1.7 percentage points from the January reading of 56%, indicating growth in manufacturing for the sixth consecutive month, and is the highest reading since August 2014, when the PMI registered 57.9%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

A PMI above 43.3%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the February PMI indicates growth for the 93rd consecutive month in the overall economy and the sixth straight month of growth in the manufacturing sector. Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through February (56.9%) corresponds to a 4.3% increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for February (57.7%) is annualized, it corresponds to a 4.5% increase in real GDP annually."

THE LAST 12 MONTHS

Read the full February PMI report from the Institute for Supply Management.

SOURCE Institute For Supply Management