Manufacturing Index Growth Slows Slightly

Manufacturing Index Growth Slows Slightly

U.S. manufacturing growth eased slightly in March after seven consecutive increases as inventories contracted slightly, a widely watched gauge of factory production reported.

The Institute for Supply Management's manufacturing purchasing managers' index slipped to 61.2 in March from 61.4 in February. Readings above 50 indicate expanding activity.

The inventory index fell to 47.4 from 48.8, suggesting manufacturers are keeping inventories lean. The ISM's price index rose to 85.0 from 82.0. The ISM's new orders index fell to 63.3 in March from 68.0 in February, while the production index increased to 69.0 from 66.3. The factory employment index eased to 63.0 from 64.5.

"On the positive side of the equation, production accelerated and inventories remained lean," Brian Bethune, chief U.S. economist at IHS Global Insight, said in a commentary. "On the not-so-positive side, orders momentum dropped considerably and export orders, in particular, dropped sharply. As a result, the orders backlog declined quite abruptly, indicating an incipient slowdown in production momentum."

He said such a slowdown was not entirely a surprise in view of disruption to export markets from the Japanese earthquake and upward pressure on crude oil prices connected with political unrest in the Middle East and North Africa. He said, though, that while those shocks "will slow momentum overall, they do not indicate major damage" to economic recovery.

Separately, China's manufacturing sector regained momentum in March as demand strengthened for autos and machinery, surveys showed.

The state-affiliated China Federation of Logistics and Purchasing reported its PMI rose to 53 from 52.2 in February and 52.9 in January. The rebound was due partly to the Lunar New Year holiday in February.

The private HSBC China Manufacturing Purchasing Managers Index edged up to 51.8 in March from a seven-month low of 51.7 in February.

-- Contact Joseph Bonney at jbonney@joc.com.