updated 4/1/2005 11:50:05 AM ET 2005-04-01T16:50:05

The manufacturing sector in the United States grew in March for the 22nd consecutive month, but at a slightly slower pace than in February.

Major Market Indices

The Institute for Supply Management said Friday that its index measuring manufacturing activity registered 55.2 in March, down from February's 55.3 reading. The performance was a bit stronger than the 55.0 analysts had expected.

Although the index was down, the fact that it remained above 50 indicated that the industrial sector continued to grow last month, but at a slower pace. A reading of 50 or above in the index means the manufacturing sector is expanding, while a figure below 50 represents a contraction.

The manufacturing data from ISM is watched closely by economists and investors because it one of the first readings of the nation's economic activity for any given month.

Norbert J. Ore, head of the group's survey committee, said the March number was boosted by strong readings in new orders and inventories.

"The manufacturing sector maintained its strength in March, finishing the first quarter in a relatively strong position," Ore said in a statement accompanying the report.

He said, however, that a strong rise in prices — include those for petroleum products — "continues to present a problem for manufacturers."

The business-funded group, which is based in Tempe, Arizona, also accidentally released its index of non-manufacturing activity on Friday. The report normally would have been made public next Tuesday.

The non-manufacturing index advanced to 63.1 in March from 59.8 the month before, the report said.

Terri Tracey, spokeswoman for the group, said "the numbers have not had a final proofing," but added that "it's rare there are changes."

She said the 63.1 reading "is firm."

The non-manufacturing index captures activities in business such as entertainment, finance and banking, transportation and business services.

The manufacturing report said that 16 industries reported growth in March; activity was level in tobacco and petroleum, while the paper industry reported decreased activity.

The new orders index advanced to 57.1 in March from 55.8 in February, while manufacturers' inventories — a measure of anticipated order demand — rose to 54.1 in March from 48.6 the month before.

The index's price gauge shot up to 73 in March from 65.5 the previous month, with the industries reporting higher prices including petroleum, rubber and plastic products, chemicals, food and apparel.

The employment reading dropped in March to 53.3 from 57.4 in February, suggesting some softening in factory hiring.

The manufacturing activity report was released shortly after the Labor Department reported that payroll growth across the country was sluggish in March, with employers adding just 110,000 jobs, the fewest since July.

Still, the labor market accommodated enough people to drop the unemployment rate to 5.2 percent.

The job market has been the sector of the economy that has been among the slowest to recover from the last recession.

In another economic report released Friday, the Commerce Department said construction spending rose by 0.4 percent in February to a seasonally adjusted annual rate of $1.05 trillion.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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