US manufacturing activity edged higher in February, ISM says

Factory activity in the States continued to shrink slightly in February, albeit by less than economists had been expecting.

The Institute for Supply Management’s manufacturing sector purchasing managers’ index edged higher to a reading of 49.5% from 48.2% in the month before.

Economists had been expecting a print of 48.5%.

Readings below 50% denote successively quicker rates of contraction in activity levels.

The recent decline in the nation-wide gauge of factory activity had led to worries among some investors that it might be pointing to significant weakness ahead in the rest of the economy, as the sector tended to lead trends in gross domestic product.

A key gauge of manufacturing strength, linked to company’s new orders was unchanged at 51.5, while another tied to the pace of job creation improved from 45.9 to 48.5.

However, the sector continued to be firmly in the grip of falling prices, with a barometer of the prices paid by companies improving from 33.5 to 38.5.

"More evidence that talk of a manufacturing recession - or, even more extreme, a broad recession triggered by a manufacturing downturn - is off the mark. To be clear, this is not a robust report, and we have no real hopes of a sustained strong rebound this year. But the hits from the strong dollar, the slowdown in China and the collapse in capex in the oil sector are all diminishing," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.