U.S. factory numbers rose at their fastest rate in February since May of 2004. This is an indicator of sustained strength in the manufacturing industry as demand rises higher. This information comes from data found in the most recent Institute for Supply Chain Management Report.
- Factory index climbed to 60.8 (est. 58.7) from 59.1 in prior month; readings above 50 indicate expansion
- Employment gauge jumped to a four-month high of 59.7 from 54.2
- Measure of new orders eased to 64.2 from 65.4; order backlogs climbed to 59.8 from 56.2
- Prices-paid index rose to 74.2, the highest since May 2011, from 72.7
Recent growth is being fueled by a pickup in economies around the globe and an increase in business investment. This boost follows the fourth quarter uptick in consumer spending, which advanced at the fastest pace in over a year.
The purchasing managers group’s measure of export orders was their highest since April of 2011. Although orders and production were slightly lower than they were in January, their numbers are still nothing to scoff at.
The report also seemed to show that factories are having troubles keeping up with the high demand of orders. The ISM’s index on order backlogs hit a 13 year high, while delivery times also increased in February, reaching their second highest level since 2010. This could be directly attributed to the spike in manufacturing employment that posted its largest month over month gain in over two years.
“All indications are that demand will continue to grow,” Timothy Fiore, chairman of ISM’s factory survey committee, said on a conference call with reporters. “There are a number of issues going on here in the supply chain that’s pushing things up. The net result is there are problems in inventories, which are growing.” (https://bloom.bg/2oziwSS)
The ISM Manufacturing Report on Business also showed 15 out of 18 manufacturing sectors indicated growth last month, with printing, primary metals and machinery leading the pack. Corporate optimism is also on the rise due to the recent tax-cut law and regulations being reduced.