Quality Magazine

Economic Activity in the Manufacturing Sector Expanded in February

March 4, 2010

TEMPE, AZ - 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.

The report was issued by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee. “The manufacturing sector grew for the seventh consecutive month during February. While new orders and production were not as strong as they were in January, they still show significant month-over-month growth. 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, as well as expansion in the manufacturing sector for the seventh consecutive month. Ore stated, “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 (GDP). In addition, if the PMI for February is annualized, it corresponds to a 4.9% increase in real GDP annually."

The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM makes no representation, other than that stated within this release, regarding the individual company data collection procedures. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making.

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management. The Institute for Supply Management, established in 1915, is the largest supply management organization in the world as well as one of the most respected. ISM’s mission is to lead the supply management profession through its standards of excellence, research, promotional activities and education. This report has been issued by the association since 1931, except for a four-year interruption during World War II.

The full text version of the Manufacturing ISM Report On Business is posted on ISM’s Web site at www.ism.ws. The next Manufacturing ISM Report On Business featuring the March 2010 data will be released at 10 a.m. (ET) on Thursday, April 1, 2010.