US manufacturing growth slows in Feb but industry is optimistic

01 March 2012 16:31  [Source: ICIS news]

WASHINGTON (ICIS)--The pace of US manufacturing growth declined slightly in February from January, a key business survey said on Thursday, although producers say they are generally positive about prospects for the year ahead.

The Institute for Supply Management (ISM) said that its closely watched purchasing managers index (PMI) fell by 1.7 percentage points in February to a reading of 52.4% compared with January’s figure of 54.1%.

Bradley Holcomb, chairman of the institute’s business survey committee, said the February poll of supply managers shows that new orders, production and employment all grew last month but at lower rates than in January.

The PMI is a composite of supplier responses to the ISM’s monthly survey of 10 different business performance measures in 18 major manufacturing sectors.

A PMI reading above 50% indicates the US manufacturing sector is expanding, while an index measure below 50% means production is contracting.

The PMI has been above 51% for 32 of the 33 months since the end of the recession in June 2009, including a recent peak of 59.9% in January 2011.

Although the February 2012 PMI of 52.4% shows continued growth, the index remains below the 59%-plus range that prevailed in the first four months of 2011.

But comments from manufacturing executives surveyed by the ISM indicate growing confidence for the year ahead.

“Business is holding steady,” an unnamed chemicals sector executive was quoted as saying, although “Concern over commodity prices is ongoing”.

The institute also reported that prices of raw materials showed gains in February for the second consecutive month.

The PMI’s subsidiary index for prices of raw materials jumped 6 percentage points in February from January, reaching 61.5%.

Chemicals manufacturers and plastics producers were among 13 industries reporting increased feedstock costs in February, the institute said.

A machinery manufacturer was quoted as saying “Still somewhat cautious about the recovery. Expecting a good year, but not seeing the orders yet”.

And a transportation equipment producer reflected concerns that have been voiced by Federal Reserve Board chairman Ben Bernanke, saying “We are optimistic about the US market this year, a little hesitant about what may happen in Europe, and unsure about China.”

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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