U.S. manufacturing and business activity picked up in February as COVID-19 numbers declined, but higher raw materials costs and supply chain challenges were continued burdens, according to Reuters (subscription) and data firm IHS Markit.
Output index: The U.S. Composite PMI Output Index, which monitors the manufacturing and services industries, rebounded to 56.0 in February from 51.1 in January.
- “It attributed the sharp rise to ‘employees returning from sick leave, increased traveling and greater availability of raw materials.’”
- A reading above 50 is indicative of private-sector growth.
Manufacturing momentum: “Activity also regained momentum in the manufacturing sector, with strong order growth and rising employment. The survey’s flash manufacturing PMI climbed to 57.5 from 55.5 in January. Economists had forecast the index for the sector, which accounts for 11.9% of the economy, rising to 56.0.”
More good signs: Businesses in the services industries reported increases in both employment and orders.
- While manufacturers continued to report high prices in this period, they said they had seen the easing of some costs.
The NAM says: “Encouragingly, the index for future output rose to the highest level since June, signaling optimism about increased production over the next six months,” said NAM Chief Economist Chad Moutray. “And delivery times remained very long but were the best since January 2021. Moreover, input costs—while still highly elevated— rose at the slowest pace since May.”