WASHINGTON – U.S. manufacturers expanded in March, ending a five-month streak of declining factory activity.
The Institute for Supply Management said Friday that its manufacturing index rose to 51.8 last month from 49.5 in February. Any reading above 50 signals growth.
The increase suggests that U.S. factories are adapting to the turmoil abroad, where a stronger dollar and weakening economies in China, Japan and elsewhere have hurt sales. But the details of the survey-based report were somewhat uneven. New orders and production improved, but the measure of employment at manufacturers contracted in a sign that factories are letting workers go.
“Manufacturing activity is stabilizing,” said Joshua Shapiro, chief U.S. economist at the forecaster, MFR.
Still, Shapiro noted that “dollar strength and weak growth in many important international markets are going to continue to weigh on U.S. producers, and we expect the recovery in the manufacturing sector in the months ahead to be a muted one.”
The setback in employment meshed with the government jobs report released separately on Friday, which showed that manufacturers shed 29,000 workers in March and 18,000 in February, in an otherwise healthy job market anchored by improving demand for homes, health care, and meals at restaurants.
Of the 18 industries in the ISM report, a dozen reported growth. Factories in primary metals, food, electronics and plastics and rubber products, among others, viewed conditions as improving.
Other manufacturing indicators have created a hazy outlook for the sector.
U.S. manufacturing output rose 0.5 per cent in January, as auto, furniture and food production advanced, the Federal Reserve reported earlier this month. But the Commerce Department found in a separate report a stiff 2.8 per cent decline during February in orders for long-lasting, durable goods.
Falling demand from overseas customers has roiled the manufacturing sector, as the stronger dollar had made American products pricier in foreign markets.
The ISM, a trade group of purchasing managers, surveys about 200 U.S. companies each month.