The manufacturing sector grew in February despite a surge in COVID-19 Omicron infections in January, signaling a mild pick up for the U.S. economy. 

The Institute for Supply Management’s manufacturing index, a closely watched measure of factory activity, was 58.6 in February, up 1 percentage point from January, the institute said Tuesday. The monthly index is based on surveys from supply managers, covering 11.9 percent of the U.S. economy. 

Readings over 50 percent show that the manufacturing sector is growing, and the uptick from January–despite the impact from the COVID-19 Omicron variant–is a  sign of resilience, and suggests that the supply chain is clearing. 

The production index, which measures factory output, was 58.5 percent, 0.7 percentage points higher than the January reading. 

Transportation equipment, one of the biggest manufacturing industries, was the fastest growing of any sector in February. This is good news after several months of slow car production. This could help bring back down the prices of used cars, which spiked last year.  

“The drag of auto manufacturing is fading. A recovery in vehicle manufacturing and growth in new car sales in 2022 is expected,” said William Adams, Chief Economist at Comerica Bank. 

However, customer inventories fell, illustrating the decline in confidence to spend; it dropped 1.8 percentage points. Low inventories could be good for production in the long term, however, because manufacturers will need to step up output as customers restock inventories. Production isn’t keeping up with demand, which leads to higher prices. 



“The US economy has solid footing right now and production is running lean,” commented Stan Shipley, Senior Managing Director and Economist at Evercore, ISI. 

Job growth in the US is projected to improve in the months of March and April as the Omicron surge wears off and fewer people get sick, but some economists believe it is not indicative for the entire year. 

“I think it's a tradeoff, it's one of those numbers where the glass is half full and half-empty, depending on perspective,” said Steven R. Ricchiuto, Chief economist for Mizuho Securities USA, LLC. 

The survey was released for manufacturers at the cusp of Russia’s invasion of Ukraine in late February. Therefore, there is a present concern about potential economic and supply chain disruptions, like materials shortages, increasing prices, and logistics challenges.