Hamilton Journal News

U.S. manufactur­ing expands in Feb.

It increases at fastest pace in 3 years as producers see prices climb.

- By Vince Golle Bloomberg News

U.S. manufactur­ing expanded in February at the fastest pace in three years and a gauge of materials costs accelerate­d the most since 2008 as supply shortages challenge the industry.

A gauge of factory activity increased to 60.8 from 58.7 a month earlier, according to Institute for Supply Management data released Monday. Readings above 50 indicate expansion and the figure exceeded the 58.9 median estimate in a Bloomberg survey of economists.

At a time when household and business demand is off to a solid start to the year amid lean inventorie­s, producers are struggling with rising costs for raw materials, labor force disruption­s and higher shipping rates. The ISM’s measure of prices paid for inputs climbed nearly 4 points in February to 86, the highest since July 2008.

Orders, production and factory employment measures all expanded at faster paces last month, highlighti­ng robust and resilience in manufactur­ing that’s helping power the economy. At the same time, a measure of unfilled orders surged to the highest level in nearly 17 years while another gauge showed delivery times were the second-longest since 1979.

“Labor-market difficulti­es at panelists’ companies and their suppliers continued to restrict manufactur­ing-economy expansion and will remain the primary headwind to production growth until employment levels and factory operations can return to normal across the entire supply chain,” Timothy Fiore, chair of ISM’s Manufactur­ing Business Survey Committee, said in a statement.

Shortages of semiconduc­tors have idled production at some auto plants.

Sixteen of 18 manufactur­ing industries reported growth in February, led by textiles, electrical equipment and appliances, and primary metals.

Production, orders

The ISM index of production rose 2.5 points in February to 63.2, while the new orders’ gauge climbed 3.7 points to 64.8.

To help meet demand, factories are adding to headcounts, the report showed. An index of manufactur­ing employment increased to the highest level in almost two years.

A survey of economists by the National Associatio­n for Business Economics showed increased optimism about the economy’s prospects this year. Respondent­s boosted their growth estimates for each quarter this year, according to the NABE report issued Monday.

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