ISM Manufacturing Index Fell to 56.5, Still Signaling Expansion

The Institute for Supply Management’s manufacturing index declined from 58.4 to 56.5 in February; however, remained above the expansionary threshold of 50. New orders declined from 65.9 to 59.5 after hitting a five-year high last month. Inventories increased 0.8 points to 47.3, as the speed of destocking has slowed for three consecutive months.

The gap between new orders and inventories, an indicator for future production, declined from 19.4 to 12.2 in February. The spread has been narrowing since late last year, indicating manufacturing’s expansion will slow over the next months.

The employment index, now at 56.1, reported its third consecutive increase, climbing 2.8 points further into expansionary territory.

>50 = expansion	Feb	Jan	Dec	Nov	Oct	Sep
Index	56.5	58.4	54.9	53.7	55.2	52.4
New Orders	59.5	65.9	64.8	61.5	58.5	60.8
Inventories	47.3	46.5	43.0	41.4	46.9	42.5
Employment	56.1	53.3	50.2	49.6	53.1	46.2

10.03.01 (Source: ISM)