TEMPE, AZ  -- The wood manufacturing industries are experiencing a jump in business activity, hiring and buying more lumber and panel. But demand is also driving up raw materials prices, and some mangers say finding employees is a challenge.

An analysis of the February PMI index of purchasing managers tracking manufacturing, issued by the Institute for Supply Management March 1, shows the overall economy grew for the 45th consecutive month, registering 54.2 percent, up 1.1 points from January, and indicating manufacturing expanded for the third consecutive month.

"Business seems to be on an uptick," said a purchasing manager surveyed at one furniture manufacturer. "The normal seasonal downturn for us has been much shorter and not as severe as in the past four years. "  Another respondent, in wood products production, said, "Demand indicators are robust. Supply is constrained. Pricing is escalating."

A New Orders Index registered 57.8 percent, an increase of 4.5 percent over January's reading of 53.3 percent, indicating growth in new orders for the second consecutive month, says ISM. All five of the PMI's component indexes — new orders, production, employment, supplier deliveries and inventories — registered in positive territory in February. 

Of the 18 manufacturing industries, 15 are reporting overall growth in February, with furniture (9th place) wood products (11th place) among them (listed here in descending order over increase):  Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Paper Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Fabricated Metal Products; Furniture & Related Products; Petroleum & Coal Products; Wood Products; Printing & Related Support Activities; Transportation Equipment; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Machinery; and Primary Metals.

Cabinetry manufacturer American Woodmark (NASDAQ: AMWD), which restructured its production plants last year, reflected the wood industry's improvement in its third quarter results: net sales for the cabinets maker rose 26 percent in the third quarter to $151.3 million, and profits were $2.1 million, a big change from the  $2.8 million loss posted a year ago. Discounting the factory closure charges, American Woodmark registered $5.2 million in profits. American Woodmark invested in its West Virginia operations and hired 187 there last year.

In specific categories the ISM tracks, wood products and furniture industries did well overall, but traded places for growth and decline according to the ISM purchase manager reports:

Production 
ISM's Production Index registered 57.6 percent in February, which is an increase of 4 percentage points when compared to the 53.6 percent reported in January. Wood Products lead this category, though furniture production declined against January: The 13 industries reporting growth in production in February — listed in order — are: Wood Products; Paper Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Primary Metals; Apparel, Leather & Allied Products; Printing & Related Support Activities; Fabricated Metal Products; Transportation Equipment; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Machinery.

Prices
The ISM Prices Index registered 61.5 percent in February, up 5 points compared to the January reading of 56.5 percent. In February, 31 percent of respondents reported paying higher prices, 8 percent reported paying lower prices, and 61 percent of supply executives reported paying the same prices as in January. Wood Products ranked second for price increases; Furniture ranked tenth.

Of the 18 manufacturing industries, 14 reported paying increased prices during the month of February in the following order: Textile Mills; Wood Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Chemical Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Transportation Equipment; and Computer & Electronic Products. 

New Orders
ISM's New Orders Index registered 57.8 percent in February, an increase of 4.5 percentage points when compared to the January reading of 53.3 percent. Furniture ranked third for new orders, though in this category wood products saw a decline.  

Employment
ISM's Employment Index registered 52.6 percent in February, which is 1.4 percentage points lower than the 54 percent reported in January. ISM says the figure is generally consistent with an increase in the Bureau of Labor Statistics data on manufacturing employment. Furniture was fifth in employment gains, while wood products did not add to employment.

Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was slower in February as the Supplier Deliveries Index registered 51.4 percent, which is 2.2 percentage points lower than the 53.6 percent reported in January. No change for wood products and furniture.

Inventories
The Inventories Index registered 51.5 percent in February, which is 0.5 percentage point higher than the 51 percent reported in January. Wood products showed a rise in inventories, while furniture showed a decline.

Customers' Inventories
The ISM Customers' Inventories Index registered 46.5 percent in February, which is 2 percentage points lower than in January when the index registered 48.5 percent. Customers' inventories have registered at or below 50 percent for 47 consecutive months. A reading below 50 percent indicates customers' inventories are considered too low.

Backlog of Orders
The 14 industries reporting increased order backlogs in February — listed in order — are: Furniture & Related Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Primary Metals; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Paper Products; Petroleum & Coal Products; Plastics & Rubber Products; Fabricated Metal Products; Miscellaneous Manufacturing; Transportation Equipment; Chemical Products; and Machinery. The two industries reporting decreases in order backlogs during February are: Computer & Electronic Products; and Wood Products.

New Export Orders
ISM's New Export Orders Index registered 53.5 percent in February, which is 3 percentage points higher than the 50.5 percent reported in January. Furniture ranked third in export order growth. Of seven industries reporting growth in new export orders in February — listed in order — are: Apparel, Leather & Allied Products; Miscellaneous Manufacturing; Furniture & Related Products; Fabricated Metal Products; Transportation Equipment; Computer & Electronic Products; and Machinery. The three industries reporting a decrease in new export orders during February are: Wood Products; Primary Metals; and Chemical Products.

Imports
ISM's Imports Index registered 54 percent in February, which is 4 percentage points higher than the 50 percent reported in January. Furniture ranked eighth in this category.

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