The ISM Manufacturing Index slipped to 54.2 in February from 56.6 in January. It was somewhat below market expectations, but not enough to be alarming. Nonetheless, four of five components were lower in the month, confirming that 2019 is off to a more moderate pace of activity after the hectic expansion in most of 2018.
New orders were down in February from January (55.5 versus 58.2) and seem to be more volatile in the past few months, although continuing to grow. Production fell sharply (54.8 versus 60.5) and also seems to be more volatile of late. Employment eased to its lowest since 52.0 in November 2016 (52.3 versus 55.5) and may reflect that businesses are hiring less after expanding payrolls in the past two years. Supplier delivery times slipped but remained moderate (54.9 versus 56.2). Inventories were up narrowly (53.4 versus 52.8).
Prices paid was little changed in February from January (49.4 versus 49.6) as energy price declines leveled off.
Export orders were up a bit month-over-month (52.8 versus 51.8) but remained in line with the slower pace of the past five months on signs of slower global expansion – particularly China and in Europe. Imports rose to their highest since 59.0 in June 2018 (55.0 versus 53.8) possibly due to decreases in the value of dollar.
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