Factory activity in the Midwest accelerated in February after falling for two consecutive months, fostering hopes that the recovery of the world's largest economy is gaining momentum.
The Institute for Supply Management-Chicago Inc. said Wednesday its business barometer rose to 64 in February. The barometer, also known as the Chicago Purchasing Managers Index, or PMI, had been at 60.2 in January. Economists polled by Thomson Reuters projected the gauge would edge up slightly to 62.
Figures greater than 50 signal expansion.
Wednesday's reading marks the 29th month of expansion and its fourth consecutive month above 60.
Increases were seen in six of eight business activity indexes, with a large advance in employment.
The employment index came in at 64.2, after dropping to 54.7 in January. That's the biggest gain recorded in four years. New orders rose to 69.2 in February, from 63.6.
Order backlogs moved back into expansion and stood at 53.6 in February, while inventories contracted for the fifth consecutive month and dipped below 50.
Other measures of regional manufacturing have also shown strength. The Federal Reserve Bank of New York said on Feb. 15 manufacturing expanded in the New York region, and the Philadelphia Fed said one day later that its index of manufacturing activity in the Philadelphia area reached a four-month high in February.
The brightened manufacturing picture was enhanced by a higher second estimate of the fourth-quarter gross domestic product released Wednesday.
Real GDP growth in the last three months of 2011 was revised up to 3.0 percent from the initial estimate of 2.8 percent. Real disposable income growth was revised up to 1.4 percent from 0.8 percent, fully driven by stronger wage and salary growth. This provides a much healthier backdrop for households and should support consumer spending growth in the first quarter this year.