New Orders, Production Indexes reflect continued economic growth

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Feb Ism

Economic activity in the manufacturing sector expanded in February for the 31st consecutive month, and the overall economy grew for the 33rd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business report issued Thursday, March 1.

The PMI registered 52.4 percent, a decrease of 1.7 percentage points from January’s reading of 54.1 percent. A reading above 50 percent indicates that the manufacturing economy generally is expanding; below 50 percent indicates that it generally is contracting. A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy.

The New Orders Index registered 54.9 percent, a decrease of 2.7 percentage points from January’s reading of 57.6 percent, reflecting the 34th consecutive month of growth in new orders. A New Orders Index above 52.3 percent, over time, generally is consistent with an increase in the Census Bureau’s series on manufacturing orders.

ISM’s Production Index registered 55.3 percent in February, a decrease of 0.4 percentage point when compared to the 55.7 percent reported in January, indicating growth for the 33rd consecutive month. An index above 51.2 percent, over time, generally is consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

“The past relationship between the PMI and the overall economy indicates that the average PMI for January and February – 53.3 percent – corresponds to a 3.6 percent increase in real gross domestic product,” said Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “In addition, if the PMI for February – 52.4 percent – is annualized, it corresponds to a 3.3 percent increase in real GDP annually.”