March ISM trade

March ISM Index-Manufacturing index shows contraction in March

Manufacturing index contracts for 14th straight month; pace of decline slower than expected

A trade group's measure of the health of the manufacturing sector contracted for the 14th straight month in March, but at a slower pace than expected and a handful of industries expect to benefit from the government's economic stimulus measures.

The Tempe, Ariz.-based Institute for Supply Management said Wednesday its manufacturing index rose to 36.3 last month from 35.8 in February. Economists surveyed by Thomson Reuters expected the index to rise to 36.

A reading below 50 signals contraction. The index hit a 28-year low of 32.9 in December.

The report, based on a poll of the Tempe, Ariz.-based trade group of purchasing executives, covers indicators including new orders, production, employment, inventories, prices, and export and import orders.

The report said declines in new orders and employment persisted, but slowed a bit. Still, none of the 18 manufacturing industries grew in March.

But the report did say that five of the industries surveyed, including electrical equipment, primary metals and machinery -- expect to gain from the government's economic stimulus measures.

"The rapid decline in manufacturing appears to have moderated somewhat," said Norbert Ore, chair of the ISM manufacturing survey committee.

New orders rose to 41.2 -- the first reading above 40 in seven months. Six industries, including computer and electronic products, said orders grew.

But the rising demand for products didn't translate into more jobs. The employment index inched off its record low of 26.1 in February to 28.1 percent in March. None of the 18 industry sectors said their labor forces grew.

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Construction spending falls for 5th straight month

Construction spending fell for a fifth straight month in February as another big drop in home building offset a slight rebound in nonresidential construction.

The Commerce Department said Wednesday that February construction activity dropped 0.9 percent, less sharply than the 1.5 percent decline economists expected. Total construction has been falling since October. The level of activity is at the slowest pace in nearly five years.

The weakness in February reflected a 4.3 percent drop in housing construction, which pushed the level down to the lowest in 11 years.

Home builders have cut back sharply, but face a rising glut of unsold homes as record mortgage foreclosures dump more properties on the market. Lennar Corp. said Monday that its fiscal first-quarter losses surged 77 percent due to charges to adjust land and inventory values, and plunging home deliveries and new orders.

The construction report showed non-residential construction rose 0.3 percent in February, a slight rebound following a 4.3 percent drop in January which had been the biggest decline in 15 years.

With the financial sector facing its worst crisis in seven decades, banks have tightened their loan standards, making it harder to get financing for shopping centers and other commercial projects.

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