An employee operates a fork lift at the Chrysler Group transmission plant… (Daniel Acker / Bloomberg )
WASHINGTON -- Growth in the crucial manufacturing sector unexpectedly slowed in March as companies reported fewer new orders and less production compared with the previous month.
The Institute for Supply Management's widely watched purchasing managers index dropped to 51.3 last month compared with 54.2 in February. The reading came in below analyst expectations of about 54.
A reading above 50 indicates growth in the sector, which covers a wide variety of industries.
March was the fourth straight month of growth after a slight contraction in November, ISM said. The index had been on the upswing until last month.
Purchasing managers' comments highlighted by ISM indicated that reduced government spending and uncertainty about federal regulations were among the reasons for the March slowdown.
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The figure for March was slightly below the 12-month average of 51.7.
The index for new orders was down 6.4 points to 51.4 last month. The production index also dropped significantly, to 52.2 from 57.6, in February.
But U.S. factories continued to expand their hiring, ISM said. The employment index rose 1.6 points to 54.2 and marked the 42nd straight month of additional hiring.
Of the 18 industries the index tracks, just three reported contraction in March -- petroleum and coal, chemicals and machinery.
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