WASHINGTON, (Reuters) – U.S. manufacturing activity increased more than anticipated in February, as COVID-19 infection subsided. However, hiring at factories slowed down, which contributed to the slowing of supply chains and high input prices.

According to the Institute for Supply Management, Tuesday’s reading for its national factory activity index increased from 57.6 January to 58.6 February. This was the lowest reading since November 2020.

An index reading higher than 50 means that there has been an increase in the manufacturing sector, which is 11.9% of America’s economy. Reuters polled economists to forecast that the index would rise to 58.0.

The manufacturing sector is recovering from a slump caused by coronavirus infected individuals, which fueled the Omicron variant of the Omicron virus, causing a surge in the number of infections. A Reuters analysis shows that the United States reports an average 64,200 COVID-19 infection per day. That’s a tiny fraction of the nearly 700,000 reported in January.

ISM Survey’s forward looking new orders subindex rose to 61.7 from 57.9 January. It was the lowest reading in six months since June 2020. The pandemic reduced travel demand, which has led to a surge in goods spending. Economists predict that demand for goods will remain strong, even if services spending is reduced by the pandemic.

Over 60 months, customer inventories have been extremely low.

From a peak of 54.5 in October, the survey’s index of factory employment fell to 52.9. This had been increasing for five consecutive months.

The gauge of work still to be done in factories increased from 56.4 in January, which was 56.4. January saw a drop of 6.4 points on the order backlog index, which was the most significant decrease since April 2020.

The global supply chain’s stress levels remained high despite the February reversal. The survey also showed this in its measure of supplier delivery, which rose from 64.6 to 66.1 in January. If the reading is higher than 50%, it means slower deliveries to factories.

The factory gate inflation remained high. According to the survey, 75.6 was the lowest reading for prices paid to manufacturers from 76.1 Jan. This indicates that there are still inflation pressures.

After Russia invaded Ukraine, inflation could increase in the coming months. The price of oil has increased to more than $100 per barrel. Russia now faces serious disruption in its exports all commodities, from oil and other metals to grain after strict sanctions were imposed by western countries.

The invasion caused inflation to be a serious problem. Consumer prices experienced their highest increase in forty years during January. This month, the Federal Reserve will likely raise interest rates. Analysts anticipate seven rate rises in the coming year.