Manufacturing expansion slowed in February as new orders, production and employment all slipped, the Institute for Supply Management said today.
The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, was 54.2 percent last month, the institute said in a monthly report. That was down from 56.6 percent in January.
One factor affecting the February index was cold weather.
“We had factories shutting down because it was too cold,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call.
Normally, he said, factories run at lower production rates. A major cold blast struck the U.S. during the last week in January. Conditions remained frigid for much of February.
The PMI is considered a leading indicator, meaning it’s a sign of what may be ahead in the economy. The ISM report is based on a survey of 350 purchasing and supply executives. A reading above 50 percent indicates a growing manufacturing economy. Below 50 percent indicates economic contraction.
Essentially, the PMI currently is either a glass half-full or half-empty, depending on outlook. February was 30th straight month with a PMI reading over 50 percent. But the month also was below the 58 percent average of the past 12 months.
While growth slowed last month, it was widespread. ISM said 16 of 18 industries surveyed reported economic expansion. Among them were printing, textiles, fabricated metal products, primary metals, miscellaneous manufacturing, transportation equipment and machinery. Only non-metallic mineral products reported economic contraction.
The group’s New Orders Index slowed to 55.5 percent from 58.2 percent in January. Thirteen of 18 industries reported a rise in orders.
ISM’s Production Index fell to 54.8 percent last month, from 60.5 percent in January. Twelve of 18 industries reported a boost in output.
The institute’s Employment Index slipped to 52.3 percent in February, down from 55.5 percent the month before.
ISM remains bullish on the PMI’s prospects for 2019.
Negotiations between the U.S. and China to resolve trade disputes are continuing. The U.S., for now, is not adding to tariffs it has placed on Chinese-produced goods. U.S. officials have said progress has been made.
“China Trade Deal (and more) in advanced stages,” President Donald Trump wrote in a Feb. 25 tweet. “Relationship between our two Countries is very strong. I have therefore agreed to delay U.S. tariff hikes. Let’s see what happens?”
“I feel a lot better today than I did a week ago,” Fiore said today, referring to the trade talks.
More generally, Fiore said manufacturing still shows signs of strength.
“I feel fairly confident,” he said. “March is normally a strong manufacturing month. I feel March will come back relatively strong on the production side.”