U.S. manufacturing activity contracted in February
ISM's manufacturing index registered 48.3% last month, down 2.4 points from January.
By Staff -- Modern Materials Handling, 3/3/2008
Economic activity in the manufacturing sector failed to grow in February, while the overall U.S. economy grew for the 76th consecutive month, according to a report released today by the Institute for Supply Management (ISM).
The ISM’s manufacturing index—known as the PMI—registered 48.3% for February, a decrease of 2.4 percentage points when compared to January’s seasonally adjusted reading of 50.7%.
A PMI of more than 50 represents expansion of the manufacturing sector, while a reading under 50 represents a contraction. PMI dropped below 50 in December and rebounded slightly in January before dropping again last month.
While February's PMI reading indicates manufacturing is contracting, it also indicates the general economy is still growing. According to the ISM report, a PMI in excess of 41.1% over a period of time generally indicates an expansion of the overall economy. The current reading of 48.3%, therefore, indicates the overall economy is growing, albeit at a slow pace.
“The past relationship between the PMI and the overall economy indicates that the average PMI for January and February (49.5%) corresponds to a 2.6 percent increase in real gross domestic product,” says Norbert Ore, chair of the ISM manufacturing business survey committee.
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