U.S. ISM Manufacturing Index Edges Higher in February

The U.S. ISM manufacturing index improved to 47.7 in February from 47.4 in January. It was below the reading of 48.4 in December, according to the Institute for Supply Management. The latest figure was the fourth consecutive month below the break-even level of 50 and it remained below the peak of 63.8 in March 2021. The figure remained near the lowest level since May 2020. The Action Economics Forecast Survey expected 47.9 for February.

Movement amongst the component series was mixed last month. The new orders index rose to 47.0 from 42.5 and stood at its highest level since October. It was, nevertheless, the sixth consecutive month below the break-even level of 50. An improved 21.3% (NSA) of respondents reported higher new orders in February while a lessened 24.1% reported a decline. Working the other way, the production index fell to 47.3 last month from 48.0, remaining well below its high of 67.0 in March 2021. Seventeen percent (NSA) of respondents reported higher production while 21.1% indicated a decline. February’s inventory index eased to 50.1 from 50.2, remaining beneath the most recent high of 56.6 in July. The supplier delivery index edged down to 45.2 but is down roughly one-third y/y, indicating much faster product delivery speeds.

The employment index declined to 49.1 in February from 50.6 in January. It was the first month below the break-even level of 50 in three months. A lessened 13.8% (NSA) of respondents reported higher employment last month while an also reduced 15.2% reported less hiring.

The prices index rose to 51.3 (NSA) in February from 44.5 in January. It stood well below its high of 92.1 in June of 2021, though it was above the December low of 39.4. A higher 24.7% (NSA) of respondents reported higher prices while a lessened 22.1% reported price declines.

In other ISM series, the new export orders index edged higher to 49.9 in February from 49.4 in January. It remained down, however, from its recent high of 57.1 in February 2022. The imports index increased to 49.9 in February from 47.8 in January, but it also was below its high of 61.0 in June 2021. The order backlog index rose to 45.1 from 43.4 and stood at the highest level in four months.

The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver's AS1REPNA database.