ISM Manufacturing Index continues to rise in February

The Institute for Supply Management (ISM) manufacturing index rose 1.3 points to 49.5 in February. Details of the report were largely positive, with production, employment, backlog of new orders, and prices rising on the month. The spread between new orders and inventories — which tends to lead the headline index — narrowed on account of higher inventories. Still, it remains higher than it was last year on average. Only seven of the eighteen manufacturing industries are reporting contraction (down from ten in January).

Though it remains in contractionary territory for a fifth consecutive month, the headline figure rose for the second month in a row, suggesting that more improvement may be on the way. Although the manufacturing sector continues to face headwinds stemming from the strong dollar and soft global economic growth, the domestic demand from non-energy related sectors will remain supportive in the coming months. At the same time, continued recovery in housing and nonresidential construction should boost the demand for manufactured products.​