US manufacturing grows for 10th month
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American manufacturers boosted activity for the 10th straight month in March and factory jobs growth accelerated, cementing a key pillar in the recovery, a survey showed.
The Institute for Supply Management (ISM) purchasing managers' index, based on a survey of supply executives, rose 1.1 point from February to 62.5 points in March.
It was the 10th month in a row above 50 points, indicating expansion in manufacturing activity.
"It looks like the factory sector is really ramping up and is now in the midst of a strong, broad-based recovery," Wachovia senior economist Mark Vitner said.
The survey showed factory jobs growth picked up, with the employment index rising 0.7 point to 57.0. It was the fifth month of expanding manufacturing employment in the survey following a 37-month contraction.
Official figures show manufacturers have shed 2.8 million jobs since January 2001.
Democratic presidential hopeful John Kerry has seized on the jobs drought as a weapon in his campaign against President George W. Bush ahead of November 2 elections.
US employment data for March, to be released Friday, could swing the outlook for the election.
Private economists on average predict the government figures will show the economy churned out 123,000 jobs in March, after a paltry gain of 21,000 in February.
Some economists even tip a gain in manufacturing employment in the month, after a 43-month stretch of net factory layoffs.
Vitner forecast a surge of 225,000 jobs in March, putting in place the last piece of the economic recovery. He tipped US economic growth of nearly five percent in 2004.
A weekly reading of the numbers of recently unemployed was only mildly encouraging.
The number of people lodging new claims for unemployment benefits fell 3,000 to a seasonally adjusted 342,000 in the week ended March 27, after a gain of 12,000 the previous week, the Labor Department said.
Among other key findings in the ISM survey:
-- Factory output accelerated, with the production index rising 1.6 point to 65.5.
-- New orders grew, albeit at a slower pace, with the index dipping 0.7 point to 65.7. The backlog of orders expanded at a faster pace, with the index up 1.5 points to 63.5. Export orders picked up speed, with index rising 7.1 points to 62.0.
-- Prices paid by manufacturers climbed faster, with the index surging to 86.0 from 81.5.
Investors cheered the data. The Dow Jones Industrial Average gained 55.63 points or 0.54 percent to 10,413.33 in mid-morning trade.
Manufacturers Alliance president and chief executive Thomas Duesterberg said the ISM survey confirmed strong momentum in the sector.
"We expect to see continued growth for the remainder of 2004," Duesterberg said.
"Although rising input costs are squeezing profit margins, today's report also confirms that firms are hiring production workers to meet growing demand," he said.
The ISM survey found some commodities in short supply: aluminum, steel, galvanized steel, stainless steel, cold rolled steel, propylene, electronic components and dynamic random access memory (DRAM) microchips.
A separate report showed wholesale prices for finished goods barely edged higher in February despite a surge in the cost of some materials such as steel.
Producer prices crawled 0.1 percent higher in February, after a 0.6-percent jump in January, the Labor Department said. Wholesale prices were up 2.1 percent over the year.
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