At a faster pace than expected, the manufacturing sector grew for an eighth consecutive month in March, according to The Institute for Supply Management.
The the purchasing managers index, rose to 59.6% in March from 56.5% in February.
"The rate of growth as indicated by the PMI is the fastest since July 2004. Both new orders and production rose above 60% this month, closing the first quarter with significant momentum going forward,"said Norbert J. Ore, CPSM, C.P.M., of ISM.
"Although the Employment Index decreased 1 percentage point to 55.1% from February's reading of 56.1% signs for employment in the sector continue to improve as the index registered a 10% month-over-month improvement, indicating that manufacturers are continuing to fill vacancies."
Daniel J. Meckstroth, Chief Economist for the Manufacturers Alliance/MAPI pointed out that the "extremely favorable March ISM report was helped by the inventory swing that has moved from slower destocking at the end of last year to restocking."
"Markets for materials and components are tight as manufacturers report slower deliveries and significant price increases. Manufacturing is the 'canary in the coal mine' for the general economy. An improvement in the pace of manufacturing activity is confirmation that the overall economy will continue to expand. What is needed though, and we expect will happen soon, is that the economic growth translates into job growth.
"The explanation for income growth must transition from stimulus and government transfer payments to wage and salaries from work (jobs and wage increases) in order to sustain the expansion," he concluded. "Today's ISM report is a confirmation that the economy is moving in the right direction."
