Manufacturing Output Expands

Recent reports show that manufacturing output expanded in February for a seventh straight month. Factory output has provided one of the few areas of strength for the economy. Still, the growth in manufacturing activity slowed compared with January, and fell short of economists’ expectations, MSNBC.com reports.

Construction spending fell for a third straight month in January. And though personal spending rose slightly more than expected, Americans’ incomes scarcely budged. In part, that was because Social Security recipients didn’t get their usual cost-of-living boost.

The Institute for Supply Management (ISM), a trade group of purchasing executives, said its manufacturing index read 56.5 last month. That was slower than the 58.4 reading in January. A reading above 50 indicates expansion.

The ISM said its employment measure grew for the fourth time in five months, accelerating to 56.1 in February from 53.3 in January. February’s number is the highest since January 2005. Gauges of production and new orders fell, indicating slower growth ahead.

Economists cautioned that manufacturers have been ramping up production for businesses that had let their stockpiles shrink to save money. If consumer spending remains tepid, manufacturing activity — and its contribution to the economy — will decline.

A pickup in business investment in equipment and software, increases in exports and slower cutbacks of inventories has helped drive production gains.

Strong productivity gains mean there’s been only slight hiring despite the ramp-up in production. The manufacturing sector added 11,000 jobs in January, the government said — the first jobs gain since January 2007.

February’s employment reading signaled that manufacturing would continue to add jobs, likely about 20,000 for the month, at most, said Paul Ashworth, an economist at Capital Economics. The manufacturing sector has lost more than two million jobs since the recession began.