ISM's Manufacturing Index Slows In February

By John S. McClenahen The manufacturing sector of the U.S. economy grew for the ninth consecutive month in February, although somewhat less expansively than during January, indicate the latest data from the Institute for Supply Management (ISM), Tempe, Ariz. Its PMI index of manufacturing activity declined 2.2 percentage points to 61.4% last month from 63.6% in January. Still, the index was well above the 50% mark that separates expansion from contraction. Encouraging, too, was the reported breadth of recovery in manufacturing. "All 20 manufacturing industries [in the index] reported growth," notes Norbert J. Ore, chairman of ISM's Manufacturing Business Survey Committee and group director of strategic sourcing and procurement at Georgia-Pacific Corp. Backlogs among the manufacturers surveyed grew during February, and ISM's employment index is at its highest level since December 1987. "This gives us realistic hope that the 42-month . . . decline in manufacturing jobs should finally come to an end within the next couple of months," says Jerry J. Jasinowski, president of the National Association of Manufacturers, Washington, D.C. As measured by ISM, new orders and production both decelerated in February. "But they are still at very positive levels," stresses Ore. "Comments from purchasing and supply managers have become increasingly optimistic as more and more industries indicate improvement. The general tone . . . has improved significantly in [the] first two months of 2004," ISM relates. Purchasing and supply managers aren't without business worries, nevertheless. Their major concerns: steel availability and energy prices, ISM reports.

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