CHICAGO U.S. manufacturing activity jumped in February to its highest level since June 2011 amid a strong rise in new orders, order backlogs, and exports and imports.
The Institute for Supply Managements Purchasing Managers Index (PMI) rose to 54.2 for the month, up 1.1 percentage points from Januarys reading of 53.1.
Monthly gains were also recorded in the index for new orders, up 4.5 percentage points to 57.8; backlog of orders, up 7.5 percentage points to 55; exports, up 3 percentage points to 53.5; and imports, up 4 percentage points to 54.
While the employment and customer inventories indices fell month on month, the pricing index climbed 5 percentage points to 61.5 percent in the same comparison. Prices rose for such commodities as aluminum, copper, fuel and steel productsespecially bar, which some buyers reported being in short supply. However, hot-rolled sheet prices fell, the survey found.
Primary metals producers and fabricators reported growth during February. Our "workload is growing, (and we need) more qualified machinists," one fabricator respondent said.
At the same time, producers and fabricators reported growth in new orders, order backlogs, production and hiring. Fabricators increased inventories, but producers reduced them. Primary metals producers said their customers inventories were too high, while fabricators believed they were too low.
Fabricators paid higher prices in February, but metal producers input pricing was flat.
Producers said their new export orders fell last month, as did imports. Fabricators saw an increase in both new export orders and imports.
Respondents to the Chicago chapters monthly survey suggested some strength is building this quarter. "Sales orders are up, and February through the end of March is looking good," one purchasing manager said.
"By the end of January, we became inundated with new orders. ... It appears that we will be busy throughout (the) first quarter. We will also be hiring new welders to assist with capacity," a second ISM member said.
"With fiscal drag hanging over its head, the U.S. manufacturing sector does not have clear sailing (ahead), but Februarys reading is its healthiest in a long time," Michael Montgomery, a senior economist at Lexington, Mass.-based IHS Global Insight Inc., said.
The PMIs "strength was right where you want it, with higher orders, output, inventories and exports," he said. "This is the ideal mix (that creates) the recipe for much faster growth."