More disappointing economic news was reported on Monday, as expected. The manufacturing sector contracted in February, according to a report released Monday by the Institute of Supply Management. The national Production Manufacturing Index hit a new low when it fell below 50 to 48.3, down from 50.7 in January.
The Institute of Supply Management is a trade group of purchasing executives. The group's report is based on a number of indicators including new orders, inventory levels, production, supplier deliveries and the employment environment; an index measurement above 50 shows growth, while anything below 50 indicates contraction.
The slowdown in manufacturing is mostly due to a decrease in imports and new orders and an increase in prices. The high prices of commodities like corn, copper, structural steel, and plastic resin are having a direct effect on many of the manufacturers. Corn was trading at a price of $567.75 on Monday, up 11.3% from close on Friday, while copper was at $394.45, up 8.9%
Regional reports in manufacturing have reflected the contraction as well. The February Business Outlook Survey from the Federal Reserve Bank of Philadelphia reported similar results with a slowdown in new orders for the region and an increase in prices when it reported its survey results last week.
The Empire State index, a report by the Federal Reserve Bank of New York on manufacturing conditions in New York state, fell sharply in February to -11.7. The drop, reported in mid-February, comes after a January reading of 9.0 and was far worse than the 6.3 reading expected by analysts.
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