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The Institute for Supply Management Purchasing Managers Index for manufacturing fell to 54.2 in February from 56.6 in January. Economists surveyed by were looking for 56 on the index. (On this index anything above 50 signals expansion in the sector; below 50 signals contraction.)

The important sub-indexes followed the pattern: they dropped but stayed in expansion territory. The New Orders Index, for example,  dropped to 55.5 from 58.2.The Production Index fell to 54.8 from 60.5. The Backlog of Orders Index increased to 52.3 from 50.3.Two pieces of good news even given the drop in this index.

First, the index stayed very firmly in expansion mode.

Second, according to the ISM, the historical relationship between the index and the overall economy indicates the February reading corresponds to a 3.3% increase in real GDP on an annualized basis. That would be a pick up from the 2.6% GDP growth reported for the U.S. economy in the first read on fourth quarter growth.