Factory sector expands for eighth straight month; index rises to 59.6% By Rex Nutting, MarketWatch WASHINGTON (MarketWatch) - The U.S. manufacturing sector expanded for an eighth straight month in March, boosted by stronger orders and production, the Institute for Supply Management reported Thursday. The ISM manufacturing diffusion index rose to 59.6% in March from 56.5% in February, the ISM said. It was the highest reading since July 2004. Higher numbers indicate more firms are growing. Economists surveyed by MarketWatch were looking for the index to strengthen to 57.5%. See our complete economic calendar and consensus forecast. Seventeen of 18 industries were growing in March, the private industry group said. Only the plastics industry was contracting. The orders and production indexes rose above 61%. The employment index slipped to 55.1%. The prices index surged to 75%. The inventories index rose in March after 46 months of contraction, a further sign that the mammoth inventory sell off is all but over. "The manufacturing sector is benefiting enormously from a need to stabilize inventories in the wake of better final demand and the rapid pace of inventory liquidation that occurred earlier," wrote Joshua Shapiro, chief economist for MFR Inc. Readings over 50% in the ISM indicate that more firms said business was improving than said it was worsening. The ISM surveys hundreds of member firms across the country each month. The index is considered a good indicator of current economic activity. In a separate report, the Commerce Department said construction spending declined 1.3% in February, in line with expectations. Also, the Labor Department said first-time applications for unemployment benefits fell by 6,000 to 439,000 last week. See our full story on jobless claims.

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