United States: ISM manufacturing index picks up in February
The Institute for Supply Management (ISM) manufacturing index ticked up to 60.8 in February from 58.7 in January, and beat market expectations of a 58.8 reading. Consequently, the index remained well above the 50-threshold that separates expansion from contraction in the manufacturing sector.
February’s improvement was the result of stronger growth in new orders, employment levels and production relative to the previous month. Moreover, backlogs of work increased in February, while new export orders also rose at a quicker pace. On the price front, input prices continued to rise on the back of higher raw material prices.
Commenting on the state of the manufacturing sector with regard to February’s print, analysts at Goldman Sachs noted:
“The composition of the report was strong, with increases in the production, new orders, and employment components. The prices paid measure rose to a 12-year high, likely reflecting the sharp rise in commodity prices. Construction spending rose further in January, and revisions to prior months were positive. Private residential construction spending increased 2.5% month-on-month in January and 21.0% compared to a year ago. We left our Q1 GDP tracking estimate unchanged at +5.5% (qoq ar).”