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Manufacturing Expands at Best Rate in 3 Years

March 1, 2017
The Institute for Supply Management reports order backlogs jumped to 57 from 49.5, the biggest one-month advance in four years. 

Manufacturing expanded in February at the fastest pace since August 2014 as factory managers reported stronger orders and production.

The Institute for Supply Management’s index climbed to 57.7, the sixth straight advance, from 56 a month earlier, the group’s report showed March 1. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 56.2.

The ISM’s gauge of orders increased to the highest level in just over three years, while an index of production posted its best reading since March 2011. The data were preceded by recent regional indicators showing similar strength that has prevailed since the presidential election as companies begin to step up investment and the global economy stabilizes.

Even while manufacturing sentiment gauges have surged, actual measures of output have shown more moderate progress. The Federal Reserve’s gauge of factory production increased 0.2% in both December and January.

The group’s gauge of new orders increased to 65.1 last month from 60.4 in January.

Backlogs Mount

Order backlogs jumped to 57 from 49.5, the biggest one-month advance in four years. The pickup in unfilled orders indicates production will probably stay strong in coming months.

The measure of export demand improved to 55, close to a December reading that was the strongest since May 2014.

The index of production rose to 62.9 in February from 61.4.

The ISM’s factory employment index fell to 54.2 from 56.1 the prior month, on March 1 report showed.

The report also factory inventories expanded in February for the first time since June 2015. Customer stockpiles, however, became leaner. The group’s gauge fell to 47.5, the fastest rate of contraction since April 2016.

A measure of prices paid eased by 1 point to 68. That’s still the second-highest reading since 2011.

By Patricia Laya