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Manufacturing index up
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March 1, 1999: 10:54 a.m. ET
Rise in purchasing managers' gauge follows eight straight months of decline
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NEW YORK (CNNfn) - Manufacturing grew in February after eight months of decline, the nation's purchasing managers said Monday, with industrial activity a good bit stronger than economists had expected.
The National Association of Purchasing Management said its Purchasing Managers' Index rose to 52.4 last month from 49.5 in January, the first month of growth since last May's reading of 51.4. A number above 50 indicates expansion in the industrial sector while one below that points to contraction.
The index came in ahead of economists' forecasts for a reading of 50 last month.
"The overall picture is one of solid growth in manufacturing activity during the month of February," said Norbert Ore, head of the group's business survey committee.
"Though it may be premature to say that manufacturing is back, particularly with the persistent softness in prices, this certainly signals a possible reversal of recent fortunes in the sector," he said in the group's report.
Production and new orders picked up last month while export orders grew for the first time since November 1997, shortly after the economic crisis in Asia started denting demand for American exports there.
The rise in export orders is the latest sign U.S. companies may have put the worst of the slowdown in Asia behind them. But there are signs demand in Europe could weaken this year as economies slow across the continent.
The report by the purchasing managers, who buy everything from cardboard to computer chips for 300 big U.S. companies, is closely watched, since it's the first broad look at the economy's performance each month. Manufacturing accounts for about a fifth of the total economy.
The group said its production index jumped 3.8 points last month while its new orders index soared 5.9 points. Export orders rose 4.2 points to a reading of 54, reversing a 14-month decline.
The report, the latest pointing to robust growth early this year, sent stock and bond prices lower in early trading as investors worried the economy's strength could rekindle inflation or force the Federal Reserve to raise short-term interest rates in a bid to cool growth.
In separate reports Monday, the government said Americans' incomes grew 0.6 percent last month, faster than economists had estimated, and construction spending jumped 1.6 percent in January, well ahead of forecasts.
Other data last week pointed to strong growth continuing into 1999 as home sales rose to a record in January and consumer confidence jumped to its highest level in six months. 
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