U.S. manufacturing activity picks up speed again in February, with supplies under pressure

By Lucia Muttigani

WASHINGTON (Reuters) – US manufacturing activity was higher than expected in February as factory workers were sluggish, helping to mitigate Govt-19 infections, complicate supply chains and keep input costs high.

The Supply Management Institute (ISM) said on Tuesday that the outlook for production over the next two months is positive, with last month’s recession growing the most in 11 years. Factories have also registered strong order growth.

“This report points to strong business conditions for production in a more supply-constrained environment, with consistently strong increases in input costs,” said Conrad Diquatros, senior economic adviser at Breen Capital in New York.

ISM’s National Productivity Index rose to 58.6 last month, from 57.6 in January, the lowest since November 2020.

A reading above 50 indicates an expansion in output, which is 11.9% of the US economy. According to a Reuters poll, economists expect the index to rise to 58.0.

The study was conducted before Russia’s invasion of Ukraine last Thursday, with some economists saying it could further paralyze the supply chain. The conflict pushed up the prices of oil and wheat and other commodities.

“The United States has few direct trade relations with Russia, but this conflict will push up global prices for energy and other commodities,” said Will Compernolle, senior economist at FHN Financial in New York.

The six major manufacturing industries – transport equipment, machinery, computers and electronics, food, chemicals, as well as petroleum and coal – have recorded moderate and strong growth.

As coronavirus infections caused by the Omigron variant are on the rise across the country, after hitting the speed bump, production is picking up speed again in line with the broader economy. According to a Reuters analysis of official data, the United States reports an average of 69,704 new Govt-19 infections a day, up from more than 700,000 in mid-January.

The futures new orders sub-index of the ISM survey rose from 57.9 in January to 61.7 last month, the lowest level since June 2020. Services such as travel. Economists expect demand for goods to remain strong, even as costs for services return as health conditions improve.

Customer inventory has been very thin for over 60 months.

The backlog index fell 6.4 points in January, the biggest drop since April 2020. The February reversal said global supply chains were under pressure.

This was also evident in the supplier delivery volume of the survey, which rose to 66.1 from 64.6 in January. If more than 50%, it is slowly distributed to factories.

The Industrial Jobs survey fell to 52.9 from 54.5 last month. It continued to increase for five months.

(By Lucia Muttigani)

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