Manufacturing Activity Rises in February
U.S. manufacturing expanded in February for the first time in nine months, adding fuel to an economy already benefiting from rising incomes and increased construction spending, new reports show.
The National Assn. of Purchasing Management’s index of manufacturing activity rose to 52.4 last month from 49.5 in January as production, orders and hiring all rose. It was the best reading since last April’s 52.5.
“The signal from this survey is clear: The manufacturing slowdown is over,” Ian Shepherdson, an economist at High Frequency Economics in Valhalla, N.Y., told Bloomberg News.
Another report showed that personal incomes rose 0.6% in January after falling a revised 0.1% in December. Spending slowed to a 0.3% gain in January as Americans bought fewer cars, after increasing a revised 0.7% in December, Commerce Department figures showed.
The Commerce Department also said construction spending increased 1.6% in January, the largest increase in seven months and higher than December’s 1.4% increase. The rise was due in large part to a 5.9% jump in government spending to a $156.8 billion rate. More than a quarter of that spending was on new highways and other road projects.
Taken together, the reports suggest the U.S. expansion, about to enter its ninth year, is firmly on track. “The economy remains sound,” said Peter Kretzmer, an economist at NationsBanc Montgomery Securities in New York. “We’re not going to slow that much--that’s the wake-up call.”
January’s increase in consumer spending was led by a 0.8% rise in services, followed by a 0.3% gain in purchases of nondurable goods such as food and fuel. Spending on durable goods plunged 2.1% following a 3.3% surge in December, reflecting the pattern of auto buying.
The fact that incomes increased faster than their spending in January helped produce a positive U.S. savings rate for only the second time in five months. The rate was 0.1% in January, minus 0.3% in December and 0.6% in November, the month when farmers collected a big subsidy payment.
Monday’s NAPM report showed that the production index, a gauge of current output, rose to 56.9 in February from 53.1 in January. The new-orders index rose to 57.2 in February from 51.3 in January. And the employment index, a gauge of hiring plans and labor market conditions, rose to 45.0 in February from 44.8 in January.
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Personal Income
Seasonally adjusted annual rate, in trillions of dollars:
January: $7.32 trillion
Source: Commerce Department
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Personal Spending
Seasonally adjusted annual rate, in trillions of dollars:
January: $5.97 trillion
Source: Commerce Department
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