February ISM report: Manufacturing keeps growing, recovering
Economic activity in the manufacturing sector expanded in February for the seventh consecutive month, and the overall economy grew for the 10th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report on Business.
"While new orders and production were not as strong as they were in January, they still show significant month-over-month growth," said Norbert J. Ore, chairman of the Institute for Supply Management Manufacturing Business Survey Committee. "Additionally, the Employment Index is very encouraging, as it is up 2.8 percentage points for the month to 56.1%. This is the third consecutive month of growth in the Employment Index. With these levels of activity, manufacturers are seemingly willing to hire where they have orders to support higher employment."
Manufacturing continued to grow in February, but the rate of growth decelerated as the PMI registered 56.5%, a decrease of 1.9 percentage points when compared to January's seasonally adjusted reading of 58.4%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.
A PMI in excess of 42%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 10th consecutive month in the overall economy.
"The past relationship between the PMI and the overall economy indicates that the average PMI for January and February (57.5%) corresponds to a 5.2% increase in real gross domestic product," Ore said. "In addition, if the PMI for February is annualized, it corresponds to a 4.9% increase in real GDP annually."