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The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Managementﾙ Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "The manufacturing sector continued to grow in February, but the rate of growth slowed when compared to January. While Production remained strong, there was a significant slowing in the rate of growth of New Orders. Manufacturing jobs continue to decline as the Employment Index's rate of decline accelerated."
ISM's Backlog of Orders Index indicates that order backlogs declined for the eighth consecutive month, while ISM's Supplier Deliveries Index reflects slower deliveries for the 14th consecutive month. Manufacturing employment continued to decline in February as the index remained below the breakeven point (an index of 50 percent) for the 29th consecutive month. ISM's Prices Index is above 50 percent as manufacturers experienced higher prices for the 12th consecutive month. New Export Orders grew in February for the 14th consecutive month. February's Imports Index grew for the fourth consecutive month.
Comments from purchasing and supply executives are quite mixed. While there is some evidence of business picking up, particularly in electronics, many express concerns. Higher energy prices are squeezing already thin margins. The threat of war is viewed as a major deterrent in a number of industries.
ISM's PMI is 50.5 percent in February, a decrease of 3.4 percentage points when compared to 53.9 in January. ISM's New Orders Index declined 7.4 percentage points from 59.7 percent in January to 52.3 percent in February. ISM's Production Index declined 0.9 percentage point from 56.3 percent in January to 55.4 percent in February. The ISM Employment Index is at 42.8 percent for February, a decrease of 4.8 percentage points when compared to the 47.6 percent reported in January.
ISM's Supplier Deliveries Index registered 53.3 percent, 0.7 percentage point higher than January's 52.6 percent. ISM's Inventories Index declined to 43.8 percent from 45.4 percent in January. ISM's Customers' Inventories Index for February is at 46 percent, an increase of 3.5 percentage points compared to the January reading of 42.5 percent. ISM's Prices Index in February is 65.5 percent, an increase of 8 percentage points from January's 57.5 percent. ISM's Backlog of Orders Index gained 4 percentage points, registering 49 percent in February compared to 45 percent in January.
ISM's New Export Orders Index registered 55.5 percent, down 0.1 percentage point from January's 55.6 percent. ISM's Imports Index declined from 59 percent in January to 55.4 percent in February.
"Supply managers are certainly being challenged by current business conditions. While volumes seem to fluctuate, prices are rising on many commodities pushed by higher energy prices," said Ore.
Of the 20 industries in the manufacturing sector, 10 industries reported growth: Tobacco; Apparel; Electronic Components & Equipment; Wood & Wood Products; Miscellaneous (a preponderance of jewelry, toys, sporting goods, musical instruments); Food; Chemicals; Textiles; Transportation & Equipment; and Instruments & Photographic Equipment.
"There were no reports of commodities in short supply. Commodities reported up in price are: Aluminum, Caustic Soda, Chemicals, Copper, Diesel Fuel, Energy, Ethylene, Fuel Oil, Gasoline, Methanol, Natural Gas, Nickel, Oil, Packaging, Plastic, Plastic Products, Plastic Resin, Plastic Shrink Wrap, Poly Bags, Polyethylene, Polyethylene Resin, Propylene, Resin, Steel, Styrene, and Titanium Dioxide. The only commodity reported down in price is Corrugated Containers," Ore stated.