Manufacturing index grows to highest post-pandemic level

The Institute for Supply Management’s Manufacturing PMI, a central measure of the health of the manufacturing industry, rose to 60.8 percent in February, its highest level since the pandemic took hold last year.

The index was 2.1 points higher than January, and represents the ninth consecutive month of growth after shrinking in March, April and May.

Any reading over 50 percent indicates growth.

“The manufacturing economy continued its recovery in February,” said Timothy R. Fiore, who chairs the ISM Manufacturing Business Survey Committee.

But challenges remain.

“Issues with absenteeism, short-term shutdowns to sanitize facilities, and difficulties in hiring workers remain challenges and continue to cause strains that limit manufacturing-growth potential,” Fiore said.

While the index saw strong performance in new orders, supplier deliveries and employment, the measure of producer prices could raise concerns as well.

The price index came in at 86 percent, a 3.9-point increase.

Some economists worry that the rush of government spending to shore up the economy could lead to consumer inflation, a prospect that could be exacerbated by higher production prices.

“The prices component of the index has soared over the past few months as the costs of key materials, including steel and oil, have surged,” said Ben Ayers, senior economist at Nationwide.

“This is likely to mean higher prices for consumers as suppliers pass along rising costs into end products – another sign that inflationary pressures are building for the economy this year,” Ayers added.