ISM Reports March Contraction in Manufacturing

A report Tuesday by the Institute for Supply Management said that manufacturing activity in the United States suffered a contraction in March, adding to evidence that the economy softened during the month.

ISM said that its manufacturing index fell 4.3 points to 46.2 in March from 50.5 in February. With ISM indices, figures below 50 indicate contraction in a particular sector.

Another negative report, this one on construction spending during February, added to the feeling of malaise about the economy in the early part of 2003.

Analysts had expected the ISM manufacturing index to decline to 49, Bloomberg reported. The decline pushed the index below the break-even point for the first time since October, when it was 49.0. It is only the second time since July that the sector contracted, according to ISM.

The new orders index, which makes up 30% of the total factory report, fell to 46.2 from 52.3 in February. The production index also fell, slipping to 46.3 in March from 55.4 in the previous month. The production index accounts for 25% of the total index.

The construction spending report, release by the Labor Department, showed a 0.2% decline in February to an annual rate of $872.2 billion. It was the first decline since August 2002, Labor said.

The decline, analysts said, was due mainly to several brutal winter storms that pounded the East Coast and Midwest during the month, Bloomberg reported.

Labor also said it was revising January's construction spending report to reflect a 2% gain during the month.