The manufacturing sector expanded in February as the economy continued a strong rebound.
The manufacturing purchasing managers’ index rose 1 percentage point to 58.6 in February, registering the 21st consecutive month of growth, the Institute for Supply Management reported on Tuesday.
The sector has been resilient despite multiple waves of the coronavirus. Demand continued to drive production as the new orders component advanced to 61.7% from 57.9% in January. After two months of moderating growth because of the omicron variant, February showed some signs of relief as the recovery began to take hold.
Supply chain bottlenecks remained a top concern, hampering sales, according to respondents to the survey of purchasing managers.
“Electronic supply chain is still a mess,” said one executive from the computer and electronic products industry.
The supply chain issue, however, suggested some improvement as the prices paid component—while staying elevated—was down 0.5 percentage points to 75.6% on the month. Inventories also improved with the index registering 0.4 percentage points higher in February. Both are components of our RSM US Supply Chain Index.
We expect the recovery to continue in March as the omicron impact fades, adding more upside risks to our 1.7% forecast of GDP growth in the first quarter. At the same time, the risks around spiking commodity prices will most likely offset some of the improvement in the global supply chain.