Institute for Supply Management reports rise in manufacturing index in February

The Institute for Supply Management's index of manufacturing activity climbed to 61.4 in February from 60.8 the previous month, which is the highest reading since it reached the same level in May 2004. The index indicates expansion in manufacturing, with February's new orders index rising to a seven-year high along with shrinking inventories and the highest level of order backlogs in a year. Export orders rose to the highest level in over 22 years, boosted by growth in developing countries like China, Brazil and India, according to the Institute for Supply Management.
Despite this expansion, commodity prices for raw materials rose for a third straight month, which may spark higher inflation and slow growth. The price increase was felt in the construction industry, as the US Commerce Department reported that spending by builders fell in January to a seasonally adjusted annual rate of $791.8 billion.
"While there are many positive indicators, there is also concern as industries related to housing continue to struggle and the prices index indicates significant inflation of raw material costs across many commodities," said Norbert Ore, chairman of the institute's survey committee.