Activity in the manufacturing sector contracted for the fourteenth consecutive month in March, according to a report released by the Institute for Supply Management on Wednesday, although the pace of contraction slowed compared to the previous month.
The ISM said its purchasing managers index edged up to 36.3 in March from 35.8 in February, with a reading below 50 indicating a contraction in the sector. Economists had been expecting the index to come in at 36.0.
Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee said, The rapid decline in manufacturing appears to have moderated somewhat, as the PMI remains in the mid-30s for a third consecutive month.
A notable slowdown in the pace of contraction in new orders contributed to the increase by the PMI, with the new orders index rising to 41.2 in March from 33.1 in February. This marks the first time in seven months that the index has climbed above 40.0.
Meanwhile, production was nearly unchanged compared to the previous month, as the production index edged up to 36.4 from 36.3.
The report also showed that the employment index rose to 28.1 in March from 26.1 in February, although it continues to indicate notable weakness in the labor market.
Earlier in the day, Automatic Data Processing, Inc. (ADP) released its report on private sector employment in the month of March, showing a much bigger than expected decrease of 742,000 jobs following a revised decrease of 706,000 jobs in February.
ADP said employment in the manufacturing sector fell by 206,000 jobs, marking the thirty-seventh consecutive decline.
On the inflation front, the ISM said its prices index edged up to 31.0 in March from 29.0 in February, but it continues to indicate a decrease in prices.
The ISM is also due to release its report on service sector activity in the month of March on Friday. The index of activity in the service sector is expected to edge up to 42.0 from 41.6 in the previous month.
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