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Buyers Point to New Gains in U.S. Economy

March 04, 1985|Associated Press

NEW YORK — The industrial economy showed signs of continued improvement in February, but some areas of concern remained, the National Assn. of Purchasing Management reported Sunday.

The organization of executives who purchase raw materials and other supplies for industry reported "a healthy increase" in new orders and slight improvements in production and employment.

For the third straight month, the purchasing managers reported more price declines than increases, "sending a strong signal that inflation will not be a problem for the foreseeable future," according to the association's monthly Report on Business.

The report is closely followed by economists as an indicator of current conditions. Government reports covering the performance of various segments of the economy during the month of February will be issued in the weeks ahead.

Improvement Resumes

As for the future outlook, the Commerce Department said Friday that its index of leading economic indicators, the government's main economic barometer, rose 1.7% in January--the steepest monthly rise since June, 1983.

"After slowing during the first half of 1984, in February, the economy continued the improvement which began in January," the purchasing agents' report said.

But it also said that there was some concern about a drop in its seasonally adjusted purchasing manager's composite index, which fell to 49.7% in February from 52.5% the previous month.

The index, based on an analysis by the Commerce Department, adjusts five components of the purchasing agents' survey--new orders, production, employment, the performance of suppliers and inventories--for normal seasonal variations and applies various weights to each figure. A reading below 50% indicates the economy is in a declining phase, while a reading above 50% points to an expansion. It was the first drop below 50% since January, 1983, but the group noted that the figures for February reflected recent revisions in seasonal adjustments.

"The economy continues to appear healthy, and we should see a respectable first quarter," said Robert Bretz, director of corporate purchasing for Pitney Bowes Inc. and chairman of the group's committee that prepares the report.

The report also said that the purchasing managers surveyed from 250 industrial companies did not appear to be particularly concerned about the March 31 scheduled expiration of a nationwide contract between the Teamsters Union and the trucking industry.

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