Despite some improvement in new orders, the U.S. industrial sector contracted for the 14th consecutive month in March, the Institute for Supply Management reported Wednesday. The ISM manufacturing index rose to 36.3% in March from 35.8% in February, showing the deep recession is not easing its grip on the factory sector. None of the 18 industries surveyed were growing in March. Economists surveyed by MarketWatch expected the index to rise slightly to 36%. See full story. Readings under 50% in the ISM diffusion index indicate more firms say business is getting worse than say it's getting better. The new orders index jumped to 41.2% from 33.1%, the first time that key index has been above 40% in seven months. The new orders index had plunged to an all-time low of 23.1% in December. The ISM "is still at recession levels but if it's sustained, the rise in the orders index, which plunged immediately after the Lehman blowup, signals a slowing in the rate of decline," wrote Ian Shepherdson, chief domestic economist for High Frequency Economics. The percentage of firms reporting higher orders - 28% -- was the most since June. Other details of the report were weak. The employment index rose to 28.1% from 26.1% in February. The production index was essentially unchanged at 36.4%. The inventory index plunged to 32.2%, the lowest in 26 years, a sign that manufacturers are reducing their stocks of unsold goods rapidly. The sooner supply is brought back into line with demand, the sooner manufacturers can resume production. The export index improved to 39% from 37.5%, showing that exports are still falling for most companies. Four industries reported higher exports, including machinery.

Source