Manufacturing Continues to Contract While Economy Grows

The U.S. manufacturing sector in February remained in contraction for the fifth consecutive month according to the latest Manufacturing ISM Report on Business. The PMI did better than expected by economists at Bank of America Merrill Lynch and Barclays who predicted a headline index of 48 and 47.5, respectively.

The February PMI increased 1.3 percentage points to 49.5 from 48.2 in January. A PMI above 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the February PMI indicates growth for the 81st consecutive month in the overall economy, while still indicating contraction (below 50) for the manufacturing sector.