For the seventh-consecutive month, the closely-watched survey offered up by the Institute for Supply Management (ISM) shows that the manufacturing sector continues to power ahead.
The ISM Manufacturing Index did drop from January’s level of 58.4 to 56.5, just shy of the Bloomberg estimate of 57.5, but the February reading is consistent with a respectable level of growth. A reading above 50 is expansionary.
In addition, the chart above continues to show that the trend towards increased production remains intact.
So far, the economic recovery has been very sluggish because consumers have been reluctant to spend. Job insecurities are still high and debt loads are heavy. And most companies are not adding employees.
However, hiring does appear to be picking up at the nation’s factories, according the the survey, with the employment index rising from 53.3 to 56.1.
Simply put, consistent increases in demand lead to higher production, and higher production forces factories to add workers in order to meet higher demand.
When we finally begin to see a more broad-based recovery, and many headwinds still remain, we will start to see consistent gains in employment, which will put the shallow and uneven recovery on a firmer footing.
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