IHS Markit: February Manufacturing Rose on Strong Demand

Written by David Schollaert

U.S. manufacturing activity grew in February amid stronger demand and easing supply disruptions, according to the latest U.S. Manufacturing PMI data from IHS Markit.

The report noted that the strong improvement in operating conditions was driven by the sharpest expansion in new orders since last October. Stronger new sales growth spurred manufacturers to increase staffing numbers and boost inventories, while pressure on capacity eased as backlogs rose at the slowest pace in a year.

“The U.S. manufacturing sector rebounded in February after the Omicron wave brought production close to a standstill in January,” said Chris Williamson, IHS Markit’s chief business economist. “However, output remains heavily constrained both by ongoing raw material supply bottlenecks and labor shortages, albeit with some signs that the supply-chain crisis has continued to ease. The decline in virus case numbers should also help alleviate labor shortages as we head into the spring.”

The seasonally adjusted IHS Markit PMI posted a reading of 57.3 in February, up from 55.5 the month prior, and only slightly lower than the earlier released “flash” estimate of 57.5 (a reading above 50.0 indicates growth). The headline figure was below the peaks seen in 2021 but signaled a stronger upturn in the health of the manufacturing sector, with sharper output and new order expansions contributing to overall growth.

“Demand is clearly continuing to run well ahead of supply, meaning it is a sellers’ market for a wide variety of goods,” added Williamson. “Although the survey’s price gauges covering companies’ costs and selling prices are off the peaks seen last year, they remain very high by historical standards and point to persistent elevated inflation in coming months. With rising oil prices adding further to soaring costs, and the Ukraine crisis likely to add to global supply disruptions, the inflation outlook is an increasing concern.”

David Schollaert

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