- Prior month report (January) was 55.5%
- The headline figure was below the peaks seen in 2021, but signalled a stronger upturn in the health of the manufacturing sector, with sharper output and new order expansions contributing to overall growth
- Although only modest overall, output rose at a faster pace amid signs of easing supply chain disruption and the sharpest expansion in new orders since last October.
- Stronger new sales growth spurred manufacturers to increase staffing numbers and boost stocks of purchases.
- Pressure on capacity softened as backlogs rose at the slowest pace in a year as material shortages eased
- Although input costs increased at the slowest pace for nine months, selling prices ticked higher at the sharpest rate since last November
- Manufacturers recorded a sharper uptick in new orders midway through the first quarter, supported by stronger demand from new and existing customer
- Less severe supply disruption was reflected in a slower increase in input prices. The rate of cost inflation eased to the softest for nine months, but remained historically elevated amid higher material and transportation fees.
- Despite a softer rise in input costs, firms were able to increase their selling prices at a sharper pace in February amid more accommodative demand conditions
- Increased new order inflows spurred greater optimism among manufacturing firms in February.
Chris Williamson, Chief Business Economist at IHS Markit said:
“The US manufacturing sector rebounded in February after the Omicron wave brought production close to a standstill in January. However, output remains heavily constrained both by ongoing raw material supply bottlenecks and labor shortages, albeit with some signs that the supply chain crisis has continued to ease. The decline in virus case numbers should also help alleviate labor shortages as we head into the spring.
Demand is clearly continuing to run well ahead of supply, meaning it is a sellers’ market for a wide variety of goods. Although the survey’s price gauges covering companies’ costs and selling prices are off the peaks seen last year, they remain very high by historical standards and point to persistent elevated inflation in coming months. With rising oil prices adding further to soaring costs, and the Ukraine crisis likely to add to global supply disruptions, the inflation outlook is an increasing concern.
With the survey data collected prior to the escalation of the conflict in Ukraine, the full impact of the situation is yet to appear in the data. Supply chains are likely to be further disrupted, with existing shortages exacerbated by safety stock building, and prices will likely come under further upward pressure. Perhaps most important will be the effect on business optimism and whether the improvement in prospects seen in February will be reversed, which could lead to reduced spending and investment.”
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