In an economy often starved for good news, the Institute for Supply Management provided some distinctly encouraging tidings earlier this morning. For example, that Arizona-based trade group intoned that its monthly manufacturing survey had come in with a reading of 54.2 in February.

That number, exceeded by 4.2 percentage points, the dividing line between an expanding manufacturing sector and one that is contracting. The result also was better than the January reading of 53.1 and was notably above the expected summation of 52.5 for last month.

This was the third consecutive month, in which this key series had shown improvement, after a long earlier string of monthly gains totaling more than 30 months. That string was broken in November, when this metric eased nominally below 50.0, registering a minuscule decline of 49.9.  

Meanwhile, the February number was the best monthly showing since June of 2011, when this series had registered 55.8. The best monthly score in 2012 had been April's 54.1. Aside from that month, the top 2012 performance had been in March, when this series had come in at 53.3.

Of the 18 manufacturing industries chronicled by this report, 15 showed improvement last month, led by apparel, leather and allied products, miscellaneous manufacturing, paper products, and electrical equipment. Just three industries contracted in February. These were textile mills, computer products, and chemical products.

As to some individual components in the overall series, we saw improvement in new orders, with that area jumping from 53.3 to 57.8. Production also gained notably, rising from 53.6 in January to 57.6 last month. Also climbing sharply were prices, going from 56.5 to 61.5. That change also represented underlying strength, but not yet an inflation problem. The most dramatic shift came in overall backlogs. In January, this component had shown a decline, coming in at just 47.5, whereas in February, it registered a score of 55.0. Also, expanding last month was employment. However, that component increased by less than in January, scoring 52.6 in the latest month, versus 54.0 to start the year.

As to comments, they generally were constructive, save for defense spending, which respondents noted had continued to decline, mirroring the pullback in that GDP component during the fourth quarter of 2012.

On the whole, this was a solid report and increases our confidence that the nation's economy, which tacked on a scant 0.1% in the fourth quarter of 2012, could expand by upwards of 2% in the current three months.