U.S. factories expanded in February at the fastest rate since May 2004, indicating sustained strength in manufacturing as demand remains solid, according to figures from the Institute for Supply Management released on March 1.
The factory index climbed to 60.8, up from 59.1 in January.
The latest advance extends a series of healthy readings in the survey-based measure of manufacturing that’s being fueled by improving global economies and firm business investment. It also comes on the heels of a late-year pickup in consumer spending, which advanced in the fourth quarter at the fastest pace in more than a year.
The measure of export orders jumped to 62.8 from 59.8, marking the fourth straight advance, the longest such stretch in six years.
However, the production index dropped to 62 in February from 64.5 in January. This was due to factories having some difficulty keeping up with demand.
The ISM’s index of order backlogs climbed to a 13-year high. Delivery times also lengthened in February, with a measure reaching the second-highest level since 2010. That may help explain the rise in the group’s gauge of manufacturing employment, which posted its largest month-over-month gain in more than two years.
In addition to firmer overseas and domestic sales, corporate optimism is getting a lift from the recent tax-cut law and reduced regulation.
Other highlights include:
Employment gauge jumped to a four-month high of 59.7 from 54.2
- Measure of new orders eased to 64.2 from 65.4
- Prices-paid index rose to 74.2, the highest since May 2011, from 72.7
- Index of customer inventories fell to 43.7 from 45.6, indicating stockpiles were being depleted at a faster rate
- Factory inventories gauge rose to 56.7 from 52.3
- Gauges of supplier deliveries climbed to 61.1 from 59.1
By Katia Dmitrieva