U.S. manufacturing expanded in February at the fastest pace since 2004, and new orders outpaced inventories, suggesting freight shipments may see an increase in bookings to replenish supply chains, the Institute for Supply Management reported.
The ISM factory index increased to 61.4 from 60.8 in January, the Tempe, Arizona-based group said. Readings greater than 50 signal growth.
The index of new orders rose to 68 from 67.8 in January while the index measuring manufacturers’ inventories dipped to 48.8, signaling contraction, from 52.4 in January. Customers’ inventories contracted at an even faster rate, with the index shrinking to 40 from 45.5.
“New orders are growing significantly faster than inventories, and the Customers’ Inventories Index indicates supply chain inventories will require continuing replenishment,” said Norbert J. Ore, chair of ISM’s Manufacturing Business Survey Committee.
Manufacturing has been a bright spot in the economic recovery, helping offset weakness in housing and employment. ISM’s employment index indicated that manufacturers are adding jobs. The index rose to 64.5 from 61.7 in January, and is above 60 for only the third time in a decade.
Separate manufacturing indexes showed manufacturing expanding in Europe in February at the fastest pace in more than 10 years, while the rate of growth at Chinese factories was the slowest in six months.
The China Purchasing Managers’ Index dropped to 52.2 from a January reading of 52.9, the China Federation of Logistics and Purchasing said. India’s manufacturing, meanwhile, expanded at the quickest pace in three months, according to a survey by HSBC and Markit Economics.
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