US factory output gears up to 22-year high

City A.M. Reporter
Factory activity in the US Midwest hit a 22-and-a-half year high this month, new data has shown, which should help the economy weather rising oil prices and maintain its steady growth momentum.

The Institute for Supply Management-Chicago's index of business activity in the Midwest rose to 71.2 – the highest since July 1988 – from 68.8 in January as new orders and deliveries and backlogs increased.

A reading above 50 indicates expansion in the regional economy.

The data, combined with other upbeat regional factory surveys, suggested a national manufacturing report due out tomorrow could show more strength than had been expected.

According to a Reuters survey of economists last week, the Institute for Supply Management's index of national factory activity probably rose to 61.0 this month from 60.8 in January.

"The big surprise of this recovery is how strong and how robust the manufacturing sector has been," said Kurt Karl, head of economic research at Swiss Re in New York.

The data had a minimal impact on US financial markets, where an announcement by value investor Warren Buffett that he was eyeing "major acquisitions" put stocks on track for their third straight month of gains.

US government debt prices rose modestly, while the dollar fell to a 3-1/2 month low against a basket of currencies.