Lack of Supply Continues to Hold Back the Pace of Manufacturing

Summary

The ISM manufacturing index rose to 58.6 in February amid a rise in new orders and production, but the backlog of orders sub-index also rose by the most since early 2011. The key message from the report was that the manufacturing sector continues to see solid demand, but activity remains constrained by an inadequate amount of supply.

Manufacturing Demand is Solid

The message from the February ISM manufacturing report was that the sector is experiencing strong demand. Most of the selected industry comments referenced some sort of solid demand backdrop, but with many providing an important caveat; they still have inadequate supply. The ISM manufacturing index rose one point to 58.6 in February, consistent with a steady pace of expansion in the sector. The production sub-index rose 0.7 points last month, signaling some increased ability of manufacturers to produce. But the largest drivers behind the gain, backlog of orders (up 8.6 points) and new orders (up 3.8 points), emphasize this continued imbalance between demand and supply. READ FULL ARTICLE>>