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  The ISM Manufacturing Index Rose to 60.8 in February
Posted Under: Data Watch • ISM
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Implications: Factory activity is off to roaring start in 2018, with the ISM Manufacturing index rising to 60.8 in February, the highest reading since 2004.   And the growth is broad-based, with fifteen of eighteen industries reported growth in February (two reported declines).  While the two most forward-looking indices - new orders and production – both ticked lower in February (remember, levels above 50 signal expansion, so these lower readings represent continued growth, but at a slower pace than in recent months), they continue to shine with readings in the 60's and suggest that activity in the manufacturing sector should remain robust in the months ahead.  The employment index showed the largest rise in February, moving to 59.7 from 54.2 in January.  Pairing this with other indicators on the strength of the labor market suggests that employment growth picked up pace in February, though heavy snow in parts of the country may put a damper on next week's employment report.  If it does, no need for concern. Look for a rebound in the employment data in the following months.  Prices, meanwhile, rose in February to a reading of 74.2, the highest since mid-2011.  A total of twenty-seven commodities were reported up in price, while no commodities showed declining costs.  This serves as yet another sign that inflation is picking up pace as economic growth accelerates, and a signal to the Fed that four rate hikes in 2018 are not just appropriate, but warranted.  In sum, the strength shown by the manufacturing sector throughout 2017 is carrying over into 2018.  In other news this morning, construction spending was unchanged in January (+0.8% including revisions to prior months).  A rise in spending on highways & streets and housing offset declines in power projects and commercial construction.

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Posted on Thursday, March 1, 2018 @ 11:41 AM • Post Link Print this post Printer Friendly

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