US Factory Activity Expands in March

Factory activity accelerated for a second straight month in March as production rebounded, in the latest sign that winter’s icy grip on the economy was loosening.

But severe weather continued to hold back economic activity in the first quarter. Construction spending barely rose in February, with private residential construction outlays recording their biggest decline in seven months, other data showed on Tuesday.

“This is a bounce back from the weather effect from what we were seeing. We should see growth in manufacturing the rest of the year with the overall growing economy,” said Gus Faucher, senior economist at PNC Financial Services in Pittsburgh.

The Institute for Supply Management (ISM) said its index of national factory activity rose to 53.7 in March, up slightly from February’s read of 53.2.

Economists polled by Reuters had forecast the index rising to 54.0 in March. Readings above 50 indicate expansion in the sector, which accounts for about 12 percent of the economy.

Activity was buoyed by a rebound in production, which ended a three-month string of slow growth. The forward-looking new orders index rose to 55.1 from 54.5 in February.

Even as the sector continues to break out of the cold spell, factory activity remains slower than during the second half of last year. Warehouses are bulging with massive stocks of unsold goods accumulated in the second half of 2013, leaving businesses with little incentive to place large orders with manufacturers.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza