Manufacturing activity in the U.S. unexpectedly grew at a modestly slower rate in the month of March, according to a report released by the Institute for Supply Management on Friday.
The ISM said its manufacturing PMI dipped to 57.1 in March from 58.6 in February. While a reading above 50 still indicates growth in the sector, economists had expected the index to inch up to 59.0.
“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.
The modest decrease by the headline index came as the new orders index slid to 53.8 in March from 61.7 in February and the production index fell to 54.5 from 58.5.
On the other hand, the employment index climbed to 56.3 in March from 52.9 in February, indicating an acceleration in the pace of job growth in the manufacturing sector.
The report also showed the inventories index rose to 55.5 in March from 53.6 in February, while the supplier deliveries index edged down to 65.4 from 66.1.
With regard to inflation, the ISM said the prices index jumped to 87.1 in March from 75.6 in February, suggesting prices increased at a notably faster rate.
“March brought back increasing rates of price expansion, due primarily to instability in global energy markets,” said Fiore. “Suppliers are not waiting to experience the full impacts of price increases before negotiating with their customers.”
Next Tuesday, the ISM is scheduled to release a separate on activity in the service sector in the month of March. The services PMI is currently expected to inch up to 57.7 in March from 56.5 in February.
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