(TNND) \u2014 Economic activity in the American manufacturing sector expanded in February for the second straight month, according to a report from the Institute for Supply Management.<\/p>\n
That was just the third month of growth in the last 40.<\/p>\n
The ISM\u2019s Manufacturing PMI<\/a>, based on a survey of purchasing and supply executives nationwide, registered a 52.4% in February.<\/p>\n Fifty is the break-even level, so anything above 50 is an expansion, and anything below 50 is a contraction. The average of the last 12 months is 49.3.<\/p>\n New orders and production both grew.<\/p>\n Factory employment, however, remained in contraction territory.<\/p>\n \u201cThere’s certainly a lot more optimism coming through,\u201d said James Knightley<\/a>, ING\u2019s chief international economist. \u201cI mean, it’s been a pretty torrid few years for the manufacturing sector, where the struggles post-pandemic have just lingered on.\u201d<\/p>\n Knightley noted that production is on a four-month growth trend.<\/p>\n He said a combination of growth in both new orders and the backlog of orders suggested that production could gain additional momentum over the coming months.<\/p>\n And Knightley pointed to stronger demand for hauling<\/a>, which also supports the notion that the manufacturing sector is gaining strength.<\/p>\n But does the growth in manufacturing matter if it\u2019s not bringing along more jobs?<\/p>\n \u201cThat’s not what voters are going to think,\u201d Knightley said.<\/p>\n The ISM survey found two of the six big manufacturing industries (transportation equipment and machinery) reported higher levels of employment in February.<\/p>\n But for every survey comment on hiring, there were 1.4 on reducing head counts.<\/p>\n Companies continued to focus on accelerating staff reductions due to uncertain near- to mid-term demand, according to the ISM report.<\/p>\n The White House has touted an \u201cAmerican manufacturing boom<\/a>\u201d under President Donald Trump, pointing to trillions of dollars in new investments<\/a>.<\/p>\n Trump has made reshoring manufacturing a key aim of his administration. And the president continues to turn to tariffs<\/a> as a tool to accomplish that aim, even after the Supreme Court struck down<\/a> his ability to implement tariffs under the International Emergency Economic Powers Act, or IEEPA.<\/p>\n But Knightley said highly automated, high-tech industries such as microchips, pharmaceuticals and cars are most likely to bring factories back to the U.S. to avoid paying tariffs.<\/p>\n \u201cFor most products, labor is still an important driver. And U.S. labor cost in the manufacturing sector is substantially higher than they are in most other countries in the world,\u201d he said. \u201cSo, the mass product, low value added items, it’s still no real incentive to make in America, because it’s just going to be cheaper to just pay the tariff.\u201d<\/p>\n The National Association of Manufacturers says the average cost of employing an American worker in manufacturing<\/a> is about $106,000 a year.<\/p>\n \u201cThat’s substantially more than it would be in China or Eastern Europe or Latin America, as well,\u201d Knightley said.<\/p>\n New tariffs under Section 122, which are limited to just 150 days without Congressional approval, might still provide some incentive for companies to reshore manufacturing, but Knightley said it\u2019s too soon to tell if tariffs are to credit for the recent growth in the sector.<\/p>\n