The overall economy grew for the 77th straight month, while the manufacturing sector remained in contraction for the second month, the Institute for Supply Management reported yesterday.
According to the ISM’s monthly report on business, the index increased to 48.6 in March from 48.3 in February.
Economists polled by IFR Markets predicted the index would slip to 48.0.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
“The manufacturing sector failed to grow in March as the PMI fell below 50% for the second consecutive month,” said Norbert J. Ore, chair of the Institute of Supply Management’s manufacturing business survey committee. “This completes the weakest quarterly performance for the U.S. economy since Q2 of 2003. Manufacturers’ order backlogs continue to erode as the new orders index failed to grow for the fourth consecutive month. Additionally, manufacturers continue to experience heavy cost pressures, as the prices they pay are still rising even with slower overall demand. Some manufacturers are still benefiting from strong export demand and continue to see growth in export orders.”
The closely watched prices paid index jumped to 83.5 from 75.5. The employment index was at 49.2, up from 46.0 in February.
The production index decreased to 48.7 from 50.7, the new orders index dipped to 46.5 from 49.1, the supplier deliveries index increased to 53.6 from 50.1, the export orders index rose to 56.5 from 56.0, and the imports index slid to 45.0 from 47.5.
The inventories index decreased to 44.9 from 45.4, the customers’ inventories index grew to 51.0 from 49.0, and backlog of orders increased to 47.5 from 45.0.