U.S. manufacturing sector sees growth in February amid continued supply constrai

The U.S. manufacturing sector saw growth in February despite continued supply chain bottlenecks, the Institute for Supply Management (ISM) reported Tuesday.

The Purchasing Managers' Index (PMI) stood at 58.6 percent, up 1 percentage point from the January reading. Any reading above 50 percent indicates the manufacturing sector is generally expanding.

Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, wrote in an analysis that the ISM manufacturing index rose in February amid a rise in new orders and production, but the backlog of orders sub-index also rose by the most since early 2011.

The New Orders Index registered 61.7 percent, up 3.8 percentage points compared to the January reading, according to the ISM report. The Production Index registered 58.5 percent, up 0.7 percentage point compared to the January reading.

The Backlog of Orders Index, meanwhile, registered 65 percent, 8.6 percentage points higher than the January reading, the report showed.

"The key message from the report was that the manufacturing sector continues to see solid demand, but activity remains constrained by an inadequate amount of supply," Quinlan and Seery said.

"The COVID-19 omicron variant remained an impact in February; however, there were signs of relief, with recovery expected in March," said Timothy Fiore, chair of the ISM's manufacturing business survey committee.

A higher-than-normal quits rate and early retirements continued, Fiore added. The ISM report showed that the Employment Index registered 52.9 percent, 1.6 percentage points lower than the January reading.