Manufacturing in the U.S. expanded at a faster pace in March as gains in production and orders showed the industry was mending at the close of a winter-depressed first quarter.
The Institute for Supply Management’s index increased to 53.7, less than projected, from 53.2 a month earlier, the Tempe, Ariz.-based group’s report showed on Tuesday. Readings above 50 indicate growth. The median forecast in a Bloomberg survey of economists was 54.
Production picked up last month as temperatures warmed and suppliers had greater success making deliveries of parts to factories. Stronger consumer spending along with a rebound in business equipment purchases would help keep factories humming and provide a bigger source of strength for the economy.
“We’re on track for decent growth in manufacturing, just not quite as robust as we saw in the second half of last year,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, who correctly forecast the ISM figure. “The weakness we saw in the very early part of this year is going to abate and we’ll see better growth.”
Estimates for the factory index from 81 economists in the Bloomberg survey ranged from 51.5 to 56. Manufacturing accounts for about 12 percent of the economy. Of the 18 industries covered, 14 reported growth in March, led by petroleum, the ISM said.
Stocks held gains after the figures, with the Standard & Poor’s 500 Index topping its intraday record. The S&P 500 advanced 0.5 percent to 1,882.09 at 10:43 a.m. in New York.
Elsewhere, a gauge of manufacturing in China, the world’s second-biggest economy behind the U.S., fell last month to the lowest level since July.
In the euro area, manufacturing was little changed in March from the prior month. An index of U.K. factories dropped to an eight-month low.
The ISM’s gauge of U.S. new orders climbed to 55.1 last month from 54.5 in February. The index of orders waiting to be filled jumped to 57.5, the highest since April 2011, from 52.