"Economic activity in the manufacturing sector expanded in February for the 19th consecutive month, and the overall economy grew for the 21st consecutive month," according to the latest Manufacturing ISM Report On Business®.

Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee, said 'February's report from the manufacturing sector indicates continuing strong performance as the PMI registered 61.4 percent, a level last achieved in May 2004. New orders and production, driven by strength in exports in particular, continue to drive the composite index (PMI). New orders are growing significantly faster than inventories, and the Customers' Inventories Index indicates supply chain inventories will require continuing replenishment. The Employment Index is above 60 percent for only the third time in the last decade. While there are many positive indicators, there is also concern as industries related to housing continue to struggle and the Prices Index indicates significant inflation of raw material costs across many commodities.'

The report showed that "No commodities are reported down in price...

ISM's Employment Index registered 64.5 percent in February, which is 2.8 percentage points higher than the 61.7 percent reported in January. This is the 17th consecutive month of growth in manufacturing employment. An Employment Index above 50.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, 14 reported growth in employment in February… Manufacturers' inventories declined in February following seven consecutive months of growth. The Inventories Index registered 48.8 percent, 3.6 percentage points less than the 52.4 percent recorded for January. An Inventories Index greater than 42.7 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis' (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The ISM Customers' Inventories Index registered 40 percent in February, 5.5 percentage points lower than in January when the index registered 45.5 percent. This is the 23rd consecutive month the Customers' Inventories Index has been below 50 percent, indicating that respondents believe their customers' inventories are too low at this time.

The ISM Prices Index registered 82 percent in February, 0.5 percentage point higher than the 81.5 percent reported in January and the highest reading since July 2008. This is the 20th consecutive month the Prices Index has registered above 50 percent. While 66 percent of respondents reported paying higher prices and 2 percent reported paying lower prices, 32 percent of supply executives reported paying the same prices as in January. A Prices Index above 49.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.

Imports of materials by manufacturers continued to expand in February as the Imports Index registered 55 percent, the same as reported in January. This is the 18th consecutive month of growth in imports.

ISM's New Export Orders Index registered 62.5 percent in February, which is 0.5 percentage point higher than the 62 percent reported in January. This is the 20th consecutive month of growth in the New Export Orders Index.

ISM's Backlog of Orders Index registered 59 percent in February, which is 1 percentage point higher than the 58 percent reported in January. Of the 82 percent of respondents who reported their backlog of orders, 31 percent reported greater backlogs, 13 percent reported smaller backlogs, and 56 percent reported no change from January.”