TEMPE, AZ -- Economic activity in the manufacturing sector expanded in February for the ninth consecutive month, and the overall economy grew for the 57th consecutive month, say the nation's supply executives in the latest Manufacturing ISM^® Report On Business^®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee. "The February PMI^® registered 53.2 percent, an increase of 1.9 percentage points from January's reading of 51.3 percent indicating expansion in manufacturing for the ninth consecutive month. The New Orders Index registered 54.5 percent, an increase of 3.3 percentage points from January's reading of 51.2 percent. The Production Index registered 48.2 percent, a decrease of 6.6 percentage points compared to January's reading of 54.8 percent. The index for inventories of raw materials increased by 8.5 percentage points to 52.5 percent. As in January, several comments from the panel mention adverse weather conditions as a factor impacting their businesses in February. Other comments reflect optimism in terms of demand and growth in the near term."

Of the 18 manufacturing industries, 14 are reporting growth in February in the following order: Textile Mills; Wood Products; Machinery; Printing & Related Support Activities; Plastics & Rubber Products; Nonmetallic Mineral Products; Transportation Equipment; Paper Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Furniture & Related Products; Primary Metals; and Chemical Products. The three industries reporting contraction in February are: Apparel, Leather & Allied Products; Petroleum & Coal Products; and Miscellaneous Manufacturing.

WHAT RESPONDENTS ARE SAYING ...

• "Cold weather is having a negative impact on our business (garment). Orders are down." (Apparel, Leather & Allied Products)
• "Continue to have trouble finding qualified CNC machinists. Desperately trying to hire CNC programmers." (Fabricated Metal Products)
• "Bad weather hampering logistics across the country." (Petroleum & Coal Products)
• "Higher than normal demand for this time of year." (Transportation Equipment)
• "Very strong month in terms of growth." (Computer & Electronic Products)
• "Many raw material disruptions due to weather and back-ups at the ports." (Chemical Products)
• "We are seeing competition heat-up this year." (Plastics & Rubber Products)
• "Slow January, but February orders are picking-up." (Food, Beverage & Tobacco Products)
• "Conservative optimism re-kindling. Steady as it goes." (Machinery)
• "Business continues to be stronger. Was at the KBIS/IBS show last week, and the feeling was much the same. Good last year and this year shows great promise." (Furniture & Related Products)

COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY

Commodities Up in Price
Aluminum; Aluminum Extrusions; Electrical Components (2); HDPE; Dairy; Natural Gas (2); Packaging; Pallets; Plastic Resins (3); Polypropylene Resins (2); Sulfuric Acid; Steel (3); Steel — Hot Rolled (4); Wire; and Wood (4).

Commodities Down in Price
No commodities are reported down in price.

Commodities in Short Supply
No commodities are reported in short supply.

Note: The number of consecutive months the commodity is listed is indicated after each item.

FEBRUARY 2014 MANUFACTURING INDEX SUMMARIES

PMI^®
Manufacturing expanded in February as the PMI^® registered 53.2 percent, an increase of 1.9 percentage points when compared to January's reading of 51.3 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI^® in excess of 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the February PMI^® indicates growth for the 57th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the ninth consecutive month. Holcomb stated, "The past relationship between the PMI^® and the overall economy indicates that the PMI^® for January and February (52.3 percent) corresponds to a 3 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI^® for February (53.2 percent) is annualized, it corresponds to a 3.3 percent increase in real GDP annually."

THE LAST 12 MONTHS

New Orders
ISM^®'s New Orders Index registered 54.5 percent in February, an increase of 3.3 percentage points when compared to the January reading of 51.2 percent. This represents growth in new orders for the ninth consecutive month. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 11 industries reporting growth in new orders in February — listed in order — are: Wood Products; Paper Products; Textile Mills; Printing & Related Support Activities; Machinery; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; and Primary Metals. The six industries reporting a decrease in new orders during February — listed in order — are: Petroleum & Coal Products; Apparel, Leather & Allied Products; Furniture & Related Products; Miscellaneous Manufacturing; Computer & Electronic Products; and Nonmetallic Mineral Products.

Production
ISM^®'s Production Index registered 48.2 percent in February, which is a decrease of 6.6 percentage points when compared to the 54.8 percent reported in January, and is the lowest production reading since May 2009 when the index registered 42.7 percent. It also indicates contraction in production following 17 consecutive months of growth. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The seven industries reporting growth in production during the month of February — listed in order — are: Nonmetallic Mineral Products; Textile Mills; Transportation Equipment; Machinery; Plastics & Rubber Products; Food, Beverage & Tobacco Products; and Fabricated Metal Products. The six industries reporting a decrease in production in February — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Paper Products; Miscellaneous Manufacturing; and Computer & Electronic Products.

Employment
ISM^®'s Employment Index registered 52.3 percent in February, which is the same percentage that was reported in January, and represents the eighth consecutive month of growth in employment. An Employment Index above 50.6 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, 12 reported growth in employment in February in the following order: Wood Products; Textile Mills; Printing & Related Support Activities; Petroleum & Coal Products; Furniture & Related Products; Machinery; Plastics & Rubber Products; Transportation Equipment; Fabricated Metal Products; Paper Products; Food, Beverage & Tobacco Products; and Electrical Equipment, Appliances & Components. The three industries reporting a decrease in employment in February are: Miscellaneous Manufacturing; Computer & Electronic Products; and Chemical Products.

Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations slowed in February at a faster rate relative to January as the Supplier Deliveries Index registered 58.5 percent. This month's reading is 4.2 percentage points higher than the 54.3 percent reported in January. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The nine industries reporting slower supplier deliveries in February — listed in order — are: Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Paper Products; Computer & Electronic Products; Machinery; Transportation Equipment; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Chemical Products. No industries reported faster supplier deliveries in February. Nine industries reported no change in supplier deliveries in February compared to January.

Inventories*
The Inventories Index registered 52.5 percent in February, which is 8.5 percentage points higher than the 44 percent reported in January, and indicates that inventories are growing, following two consecutive months of contraction. February's reading reflects the largest month over month inventory increase since April 1988 when the percentage of growth was 9.1 percent over March 1988. An Inventories Index greater than 42.8 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 eight industries reporting higher inventories in February — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Plastics & Rubber Products; Machinery; Furniture & Related Products; Food, Beverage & Tobacco Products; Transportation Equipment; and Electrical Equipment, Appliances & Components. The four industries reporting decreases in inventories in February are: Apparel, Leather & Allied Products; Paper Products; Fabricated Metal Products; and Chemical Products. Six industries reported no change in inventories in February compared to January.

Customers' Inventories*
ISM^®'s Customers' Inventories Index registered 46.5 percent in February, which is 2.5 percentage points higher than in January when the index registered 44 percent. This month's reading indicates that customers' inventories are considered too low, but higher than reported in January. Customers' inventories have registered at or below 50 percent for 59 consecutive months. A reading below 50 percent indicates customers' inventories are considered too low.

The five manufacturing industries reporting customers' inventories as being too high during the month of February are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Chemical Products. The eight industries reporting customers' inventories as too low during February — listed in order — are: Textile Mills; Nonmetallic Mineral Products; Transportation Equipment; Machinery; Fabricated Metal Products; Paper Products; Computer & Electronic Products; and Plastics & Rubber Products.

Prices*
The ISM^® Prices Index registered 60 percent in February, which is a slight decrease of 0.5 percentage point compared to the January reading of 60.5 percent. In February, 27 percent of respondents reported paying higher prices, 7 percent reported paying lower prices, and 66 percent of supply executives reported paying the same prices as in January. A Prices Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.

Of the 18 manufacturing industries, 13 reported paying increased prices during the month of February in the following order: Wood Products; Textile Mills; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Chemical Products; Furniture & Related Products; Machinery; Paper Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Miscellaneous Manufacturing; Transportation Equipment; and Computer & Electronic Products. No industry reported paying lower prices during the month of February.

Backlog of Orders*
ISM^®'s Backlog of Orders Index registered 52 percent in February, which is 4 percentage points higher than the 48 percent reported in January, indicating growth in order backlogs following one month of contraction in the last five months. Of the 85 percent of respondents who reported their backlog of orders, 22 percent reported greater backlogs, 18 percent reported smaller backlogs, and 60 percent reported no change from January.

The eight industries reporting increased order backlogs in February — listed in order —  are: Wood Products; Primary Metals; Electrical Equipment, Appliances & Components; Chemical Products; Paper Products; Fabricated Metal Products; Machinery; and Computer & Electronic Products. The seven industries reporting decreases in order backlogs during February — listed in order — are: Nonmetallic Mineral Products; Petroleum & Coal Products; Apparel, Leather & Allied Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Transportation Equipment; and Food, Beverage & Tobacco Products.

New Export Orders*
ISM^®'s New Export Orders Index registered 53.5 percent in February, which is 1 percentage point lower than the 54.5 percent reported in January. February's reading reflects growth in the level of exports for the 15th consecutive month.

The eight industries reporting growth in new export orders in February — listed in order — are: Textile Mills; Electrical Equipment, Appliances & Components; Chemical Products; Transportation Equipment; Paper Products; Machinery; Food, Beverage & Tobacco Products; and Fabricated Metal Products. The six industries reporting a decrease in new export orders during February — listed in order — are: Wood Products; Primary Metals; Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Miscellaneous Manufacturing; and Computer & Electronic Products.

Imports*
ISM^®'s Imports Index registered 53.5 percent in February, which is the same percentage that was reported  in January. This month's reading represents 13 consecutive months of growth in imports.

The six industries reporting growth in imports during the month of February — listed in order — are: Primary Metals; Food, Beverage & Tobacco Products; Machinery; Transportation Equipment; Computer & Electronic Products; and Chemical Products. The five industries reporting a decrease in imports during February are: Nonmetallic Mineral Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; and Fabricated Metal Products. Six industries reported no change in imports in February compared to January.

* The Inventories, Customers' Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy
Average commitment lead time for Capital Expenditures increased 8 days to 137 days. Average lead time for Production Materials decreased by 2 days to 58 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased 1 day to 27 days.

About This Report
The data presented herein is obtained from a survey of manufacturing supply managers based on information they have collected within their respective organizations. ISM^® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. Use of the data is in the public domain and should be compared to all other economic data sources when used in decision-making.