U.S. Manufacturing Activity Expands At Slightly Faster Rate In March

(RTTNews) - Activity in the U.S. manufacturing sector expanded at a slightly faster rate in the month of March, according to a report released by the Institute for Supply Management on Tuesday, although the index of activity in the sector rose by a little less than expected.

The ISM said its purchasing managers index crept up to 53.7 in March from 53.2 in February, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to climb to a reading of 54.0.

Bradley Holcomb, chair of the ISM Manufacturing Business Survey Committee, said, "Several comments from the panel reflect favorable demand and good business conditions, with some lingering concerns about the particularly adverse weather conditions across the country."

The modest increase by the headline index was partly due to a substantial rebound in production, as the production index surged up to 55.9 in March after tumbling to 48.2 in February.

The ISM said the sharp jump by the production index reflects the largest month-over-month increase since June of 2009.

The backlog of orders index also shot up to 57.5 in March from 52.0 in February, while the new orders index showed a more modest increase to 55.1 from 54.5.

Meanwhile, the report said the employment index dipped to 51.1 in March from 52.3 in February. The reading above 50 still indicates the ninth straight month of job growth in the manufacturing sector.

The prices index also slipped to 59.0 in March from 60.0 in the previous month, indicating a modest slowdown in the pace of price growth.

Chris Low, chief economist at FTN Financial, said, "If manufacturing activity was depressed by bad weather in December-February, it is going to take some time for it to recover in the spring."

"There are signs of life in the March data, but the headline and most subcomponents remain well below their November levels," he added.

Thursday morning, the ISM is scheduled to release a separate report on activity in the service sector in the month of March. The service sector index is expected to climb to 53.3 in March from 51.6 in February.