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  The ISM Manufacturing Index Increased to 53.2 in February
Posted Under: Data Watch • ISM
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Implications: After a storm-ravaged January, the ISM index, a measure of manufacturing sentiment around the country, recovered in February, coming in at 53.2 despite continued bad weather. While not as strong as the levels we saw in mid-to-late 2013, we expect the index to continue to rebound as the ice eventually thaws and companies ramp up production to make up for lost time. Even with the unusually cold winter, the index has remained in expansion territory for nine consecutive months. The mix of activity measures in February was obviously affected by the weather, where lost days of work are harder to offset than just changing the day an order is placed. The production index, dropped 6.6 points, falling to 48.2 from 54.8 in January, hitting the lowest level for the index since 2009. But, at the same time, the new orders index rose 3.3 points to 54.5. According to the Institute for Supply Management, an overall index level of 53.2 is consistent with real GDP growth of 3.3% annually. Given other data, we think real GDP growth will be noticeably slower in Q1, but will rebound in Q2. On the inflation front, the prices paid index fell slightly to 60.0 in February from 60.5 in January. Still, little sign of inflation, but we don't expect this to last given loose monetary policy. In other news this morning, construction defied the brutal winter weather in January, eking out a 0.1% gain. Including upward revisions for prior months, construction increased 1.4%. The slight gain in December itself was due to an increase in new single-family home construction, which offset a broad drop in government projects.

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Posted on Monday, March 3, 2014 @ 11:32 AM • Post Link Print this post Printer Friendly

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