WASHINGTON- US manufacturing activity increased to a three-year high in February amid a surge in new orders, but factories continued to face higher costs for raw materials and other inputs amid labor shortages at suppliers as the pandemic drags on.
The acceleration reported by the Institute for Supply Management (ISM) on Monday was despite a global semiconductor chip shortage, which has hurt production at automobile plants. Other data showed construction spending surged to a record high in January, boosted by strong private and public outlays.
The reports were the latest indications of strong economic performance early in the first quarter, thanks to nearly $900 billion in additional COVID-19 relief money from the government and a drop in new coronavirus infections and hospitalizations.
“We are looking at an economy that is picking up steam,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania. “But we are not talking high inflation, just levels that reflect a solidly growing economy.”
The ISM said its index of national factory activity rebounded to a reading of 60.8 last month from 58.7 in January. That was the highest level since February 2018.
A reading above 50 indicates expansion in manufacturing, which accounts for 11.9 percent of the US economy. Economists polled by Reuters had forecast the index edging up to 58.8 in February. – Reuters