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ISM Manufacturing Index Indicates Slight Improvement in Economic Contraction

The U.S. industrial sector contracted for the 14th straight month in March, according to the Institute for Supply Management's (ISM) manufacturing index, but the number showed improvement for the third straight month. The manufacturing index for March rose to 36.3 percent, an improvement over February's 35.8 percent and slightly higher than industry experts' average prediction of 36 percent. A reading below 50 percent indicates economic contraction. None of the ISM's 18 manufacturing industries reported growth in March. At the same time, the ISM's new orders index rose to 41.2 percent, a large jump from February's 33.1 percent reading; it is the first time in seven months that the index has been above 40 percent. "It's too early to look for a turnaround, but maybe it's time to start saying that things are not getting as bad as quickly as they were earlier," says Standard & Poors economist David Wyss, quoted in a report on Bloomberg News' website. In surveying its members for the indices, the ISM also questioned members about the stimulus funds from the American Recovery and Reinvestment Act. Thirty-six percent of respondents indicated that their industries would benefit; specific sectors were electrical equipment, appliances and components, miscellaneous manufacturing, nonmetallic mineral products, primary metals, and machinery.

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