Mar 1, 2011

Manufacturing Growing At Fastest Pace In 7 YearsBy Christopher S. RugaberTheNewsTribune.com

WASHINGTON — U.S. manufacturers expanded at the fastest pace in nearly seven years last month, but a sudden rise in the price of raw materials could threaten their profits.

The Institute for Supply Management said Tuesday that its index of manufacturing activity rose to 61.4 in February, up from 60.8 the previous month. That’s the highest reading since it reached the same level in May 2004. The ISM’s index bottomed out at 33.3 in December 2008, its lowest point in nearly 30 years.

Any reading above 50 indicates expansion. The manufacturing sector has now expanded for the past 19 months.

The rebound in manufacturing is gaining momentum, the report showed. The new orders index rose to a seven-year high. A measure of order backlogs rose to its highest level in a year. And inventories are shrinking, both at manufacturers and their customers. All are signs that factory output is likely to keep growing.

“The recovery in the sector is both robust and on track,” said Ian Shepherdson, an economist at High Frequency Economics.

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