NEW YORK, Feb 28 (Reuters) - Economists expect Monday's Institute of Supply Management survey to show a pullback to 52.4 in February from January's 53.9, showing the manufacturing sector continues to expand, albeit sluggishly.
Weak reports from the Philadelphia Federal Reserve and New York purchasing managers had stirred talk the ISM index could also fall sharply. But much of the fear faded Friday when the Chicago PMI came in above expectations.
The Chicago business barometer slipped to 54.9 in February, undoing some of January's bounce to 56.0, but was still above market forecasts of 53.0. The Chicago area is heavily weighted toward auto production, however, and that can lessen its usefulness as a guide on the ISM.
A reading above 50 in the ISM indicates expansion in the national manufacturing sector, while one below that level indicates contraction. The report is slated for release on Monday, March 3 at 10 a.m. EST/(1500 GMT).
Following are comments from economists:
JAMES GLASSMAN, SENIOR ECONOMIST, J.P. MORGAN CHASE:
"We've kept our forecast at 52.0 after the Chicago PMI. The Philly and New York reports were much weaker, so it's unclear which way the national report will lean.
"Overall, the impression is that things did slow down in February, but not by as much as many people had feared. In fact, given all the talk of war and terrorism and the like, it's surprising business conditions are not a lot worse."
DAVID SLOAN, ANALYST, 4CAST:
"We look for a Feb ISM manufacturing index of 52.0, down from 53.9 in Jan, though still signaling the fourth straight month of manufacturing expansion.
"This would be a steeper slowdown than in the Chicago PMI, which is often slower than the ISM index to reflect changing circumstances, but less steep than the slowdowns seen in the New York Fed's Empire State survey and the Philly Fed, where the breakdowns showed new orders stronger than the headline indexes.
"The ISM's new orders index, unlike in the Empire State and Philly Fed, does contribute to the headline index, and should keep the ISM index positive. However, tougher seasonal factors will act as a restraint, as should the increasing risk of war and higher energy prices. We expect new orders to slow to 55.0 from 59.7 in Jan and 62.4 in Dec."
JADE ZELNIK, CHIEF ECONOMIST, RBS GREENWICH CAPITAL MARKETS, GREENWICH CONN.:
"The Chicago results are consistent with GCM's view that the ISM manufacturing index will remain well above 50 this month -- GCM calls for a 52.3 reading, down from 53.9 in January."