Economic activity in the US manufacturing sector contracted  in February for the 13th consecutive month, and the overall economy contracted for the fifth consecutive month, America's supply executives said today in the latest Manufacturing ISM Report On Business.

Norbert J. Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee said: "Manufacturing continues to decline at a rapid rate in February. While production has slowed its rate of decline, employment continues to fall precipitously. Prices continue to decline, but price advantages are not sufficient to overcome manufacturers' apparent loss of demand. Survey respondents appear generally pessimistic about recovery in 2009. Some express hope that the stimulus package will help their industry."

PERFORMANCE BY INDUSTRY

None of the 18 manufacturing industries reported growth. The industries reporting contraction in February — listed in order — are: Primary Metals; Wood Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Paper Products; Textile Mills; Fabricated Metal Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Plastics & Rubber Products; Chemical Products; Machinery; Transportation Equipment; Computer & Electronic Products; Petroleum & Coal Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; and Food, Beverage & Tobacco Products.

WHAT RESPONDENTS ARE SAYING ...

• "Customers across the board are being very cautious about ordering any stock." (Transportation Equipment)
• "Business is very slow, some of which is due to seasonality, and some is due to the state of the economy." (Chemical Products)
• "Asia previously was over 50 percent of our business and is now close to zero." (Machinery)
• "Still seeing frequent attempts at increases while everything is reacting to an economy that is retracting." (Food, Beverage & Tobacco Products)
• "Business slightly improved in February. May be the result of inventories finally coming into balance with lower demand." (Paper Products)

PMI

Manufacturing contracted in February as the PMI (Purchasing Managers' Index) registered 35.8 percent, which is 0.2 percentage point higher than the 35.6 percent reported in January. This is the 13th consecutive month of contraction in the manufacturing sector. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates contraction in both the overall economy and the manufacturing sector. Ore stated, "The past relationship between the PMI and the overall economy indicates that the PMI for February (35.8 percent) corresponds to a 1.7 percent decline in real gross domestic product (GDP) on an annual basis."