ISM Report: Demand, Production Strengthening As Economic Recovery Gains Momentum

In a sign that the economy continues to recover, albeit unevenly, manufacturing just finished up another strong month.

New orders and production rose at manufacturing companies in February, according to the Institute for Supply Management's monthly Report on Business, released Tuesday. As demand for certain goods appeared to be strengthening, 61.4 percent of manufacturers reported that business in February was better than in the previous month. That figure, which handily beat economists' expectations, is a high unseen since the heady days of May 2004.

"Manufacturing appears to be red hot," said Ryan Sweet, an economist at Moody's Analytics. He added that growth in the sector is "supported by improvement in consumer spending in the U.S., but also by an improvement in global demand."

Indeed, economic activity in the manufacturing sector expanded for the 19th consecutive month, according to the ISM. As exports increased, the majority of survey respondents expressed confidence in the economy. The ISM report is considered an indicator of broader economic trends.

But other forces may challenge this rosy picture. The unemployment rate remains high, at 9 percent, and the strong ISM report doesn't necessarily mean the jobs situation will improve soon. Even as business booms, companies in recent months have shown reluctance to hire.

In addition to the drags posed by falling home values and high unemployment, oil prices have been rising in recent weeks, as unrest in the Middle East has spurred fears of a global supply disruption. Rising oil prices sap dollars from consumers, and hit businesses' bottom lines, as fuel becomes more expensive.

The price of Brent crude, an industry benchmark, hovered just above $100 a barrel for the first few weeks of February. It broke $105 last week and has been climbing. Early this week, the price cleared $114, its highest value since the fall of 2008, after a summer of record-high prices helped drag the economy into recession.

That increase is likely too recent to have been factored into the newest economic data. By the time March is over, consumer spending this quarter may turn out disappointing, Sweet said. Such spending, which makes up the majority of the country's economic activity, is a key driver of growth.

Comments

[cyclone70]

07:37 PM on 03/02/2011

so much of what is left o US mfg is a hollowed out shell of what it used to be, now its mostly final assembly and repackaging operations of foreign made components,

In the past manufaturing had a multiplier effect that spread to materials and parts suppliers, service and support, tooling and equipment, much of that has been decimated.

That is why we are not seeing manufacturing leading the pull out of recesion like it once did since som much of the supply service and support base has been offshored

[MIKEBC]

12:36 PM on 03/02/2011

Good job democrats, Obama's economic policies are working and the neocons can't stand it!

[guveqzero]

09:56 AM on 03/02/2011

This is the reason the US needs to manufacture. But since it accounts for such a small percentage of our economy, wages will be kept low by an unlimited supply while corporate profits tread onward, keeping the rich happy and the rest of us in misery.

[keramos]

11:12 AM on 03/02/2011

But, but . .. according to plutocrat philosophy, making them happy should be making the rest of so happy that we should be having perpetual orgasms.   Isn't that so?  Wait, maybe that's the cretin or confusciousing philosophies.

[jcwtts1]

01:24 PM on 03/02/2011

Trickle down happiness. I love it

[bluecatb]

12:49 AM on 03/02/2011

Now Republicans getout the way and let the President start the green jobs manufacturing training and let's reconvert these drafty moldy homes of the 18th century with modern heating and energy service. Let's make sure if the cuts to social security seniors of raising the age occur, that they don't have a debit energy service, but a profitable one that sells back excess solar or wind energy fromt heir housing to save the states.

Let's get the poor who can't afford cars, college or dropped out, that skill in installation of solar manufacturing and get them off the state welfare rolls, as productive skilled workers.

Let's stop talking about it, and "be" about it.

[Jim Krow]

12:09 AM on 03/02/2011

By the way Bohenor, where are the jobs?

[Jim Krow]

12:08 AM on 03/02/2011

Manufacturing what? The only "red hot" manufacturing in America is BS.

[eric14]

07:51 PM on 03/01/2011

How about a little bar chart showing manufacturing performance by sector?

[xilduq]

07:10 PM on 03/01/2011

i can't wait to hear what's next from the GoebbeIs Ministry of Prop@ganda

[yappnmutt]

06:56 PM on 03/01/2011

someone is going to get dizzy and spray chunky stuff from their mouth with all this spinning.

[Sundialsvc4]

06:19 PM on 03/01/2011

I love to read "spin."

There is a H-U-G-E distance between "observing that manufacturing orders are up" (however you may wish to define that statistic ... heh ...) and saying that "happy days are here again."

Throughout all the years of 1929, 1930, 1931, 1932, and 1933, prosperity was always "just around the corner."

This should be a sobering cautionary tale for every one of us today.

The economic situation that we now find ourselves in today, is almost exactly a repeat of what happened in 1929. The country neglected the core economic businesses of production in favor of the chimera of prosperity offered by banker's speculations. The First Great Depression of 1929 persisted until, when finally compelled by the Second World War, the country threw itself into actual production again ... not merely crowing that "orders are up," but in a headlong race to stop the German industrial machine.

Perhaps ... we should be paying just a little bit more attention ... to that "German industrial machine." And that "Japanese industrial machine." And that "Russian industrial machine." And that "Chinese industrial machine."

Tell me... do those names sound familiar to you?

No? Ask your grandpa what he thinks . . .

[Sundialsvc4]

06:25 PM on 03/01/2011

Postscript:

"Let me put it to you this way. For every one American on this planet, there are about twenty non-Americans, and THOSE people do NOT have their heads up their arses."

Nor do they particularly need to trade with the United States.

Contrary to the fond notions of the United States, their economies will not de-materialize as a consequence of "not trading with the United States," nor by anything that the United States might do to them.

It's a great big world out there, and nearly all of it is well beyond the reach of the United States official propaganda machine. The United States has a choice: either participate in "that great big world out there," or be left behind by a world full of people who are a lot smarter than you are.

Heh. I prefer the former. I don't owe any allegiance to Timothy Geithner OR Ben Bernanke, nor to any of the other couple-dozen-or-so vicious clowns who seem to have the country's ear right now! (Where's the Gong? I wanna ring it on those people right now.)

[Duppy]

05:36 PM on 03/01/2011

Thank you President Obama for saving the auto industry. If it were up to Republicans, they would be out of business, millions unemployed and our manufacturing base at zero.

[CDRUSNret]

05:53 PM on 03/01/2011

Now the new employees at those plants make half what the others do. Thank you BHO! The non union auto workers for Honda, Nissan, BMW, Mitsubishi, and Toyota do much better than the new union members for GM and Chrysler. They and Ford didn't need saving.

http://www.thesunnews.com/2010/06/19/1541266/new-uaw-hires-find-a-lower-pay.html

http://www.upi.com/Top_News/2008/12/04/Dixie-welcomes-non-union-auto-jobs/UPI-17151228433854/

[bluejoni2525]

06:09 PM on 03/01/2011

You really need to read your own articles !!! Especially the second one !! If the President didn't SAVE the jobs they wouldn't have one now !! All those foreign makers got money from their countries and many tax breaks here and Ford was just in a better position before the downturn ( it had already made it's cuts ) !!!

[oilfield]

08:22 PM on 03/02/2011

isnt it amazing they make less money from the union negotiating with the union. now the only thing to do is to become non union.

[Joseph Joyal]

04:48 PM on 03/01/2011

Spending up, down flat everyone tells a different story. Manufacturing increase? not likely much there give how poor it has been I would ride it as more of an bottoming out and evening out finally but as fuel goes up the economy will head the other direction. And if the GOP gets its way we can kiss it all good bye.
The only growth has come on the back of government spending which is coming to a stop, even the president has called for cut backs. So we are not heading in any direction right now and won't expect any imporvement anytime soon, 5-8 years before we see good time if the government keeps cutting.

[traceymarie]

03:41 PM on 03/01/2011

The banks are starting to lend, housing is starting to level off to "real" value, manufacturing up, employment inching(barely) lower, people are spending again all signs of progress forward. Yet, the repub/bagger polititians are panic mode to stop any more positives all for power and the baggers are cheering them on.

[jwoww]

03:54 PM on 03/01/2011

banks are lending, you see that in the new car industry, but housing is far from the bottom, so is commercial real estate. there are a boatload of forecloures still pending. the spring will be a key indicator for mfg, especially with $100 PB oil loomin which will drive up costs of the raw materials.

[traceymarie]

05:25 PM on 03/01/2011

new/used car lending, UP. Home lending UP. foreclosures are hitting the bottom now and banks are lending at rates between 4.7%-5.5%. Oil production is up in the OPEC countries, one(libya) is down. We have an excess of oil surpluses as well as natural gas.With your general hate and bagger attitude nothing will be good enough untill the nee-grow is out of the WH.

[xilduq]

07:19 PM on 03/01/2011

what about the shadow housing inventory?
what about the people rolling off the extended unemployment benefit rolls (the 99ers)?
- isn't it freakin hilarious how once off the roll, they disappear?

you're right. happy days are here again!

[traceymarie]

07:39 PM on 03/01/2011

wallow in the filth of unhappiness and I will stay in the light that America is recovering

[vonbek]

03:34 PM on 03/01/2011

I read someplace that making hamburgers in fast-food restaurants is now considered part of the manufacturing sector are the numbers mention including burger flippers?

[traceymarie]

03:39 PM on 03/01/2011

what a ridiculous comment, are you a bagger?

[wendy scott]

05:02 PM on 03/01/2011

Link? And exactly how do you become a Mod1 with only 24 fans? Tricks are for baggers.

[traceymarie]

05:26 PM on 03/01/2011

it probably has several monikers and types filth then flags it.

[demilieu]

03:21 PM on 03/01/2011

I was reading one administration target is advanced training for welders so they can make the 500 or so welds a minute needed to stay competitve with manufacturing robots.