A report from the Institute for Supply Management (ISM) revealed on Friday the U.S. manufacturing sector’s activity continued to shrink in February at a quicker pace than in January.
The ISM's index of manufacturing activity - the manufacturing PMI - checked in at 47.8 per cent in February, down 1.3 percentage points from an unrevised January reading of 49.1 per cent. The February reading pointed to the contraction in the U.S. manufacturing sector for the 16th straight month and at a sharper pace than in January.
Economists had forecast the indicator to rise to 49.5 per cent.
According to the report, the New Orders Index fell 3.3 percentage points to 49.2 per cent last month, returning into contraction territory after a one-month growth. The Production Index decreased 2.0 percentage points to 48.4 per cent, also moving back into negative territory after a one-month increase. The Employment Index declined 1.2 percentage points to 45.9 per cent, evincing employment reduced for the fifth month in a row. The Inventories Index slipped 0.9 percentage points to 45.3 per cent, suggesting manufacturing inventories dropped at a slightly faster rate compared to January. Meanwhile, the Supplier Deliveries Index rose 1.0 percentage point to 50.1 per cent, indicating that delivery performance of suppliers to manufacturing organizations was slower in February after 16 straight months in faster territory (the indicator is inversed; a reading of above 50 per cent indicates slower deliveries). The Backlog of Orders Index climbed 1.6 percentage points to 46.3 per cent, implying order backlogs contracted for the 17th consecutive month. On the price front, the Prices Index edged down 0.4 percentage point to 52.5 per cent, indicating raw materials prices in February rose for the second month after eight successive months of declines.