The pace of growth in U.S. manufacturing was little changed in March from a month earlier, while business accelerated at service companies, according to the Institute for Supply Management.
Also Friday, a third report showed that the University of Michigan’s final consumer sentiment index declined in March, the third straight month it has fallen.
The Tempe, Ariz.-based Institute for Supply Management said its factory index fell to 55.2 from 55.3 in February. Its gauge of non-manufacturing business rose to 63.1 last month from 59.8. Readings higher than 50 indicate expansion.
The factory gauge is consistent with increased production, while growth at service companies is the strongest this year. Companies are meeting demand with fewer workers. Jobs gains in March were the smallest in eight months, the Labor Department said Friday.
“Companies are doing more with less,” said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago. They are “aggressively defending the bottom line against higher oil prices. That means the impact of higher oil prices is going to be felt first in the labor market, rather than inflation.”
The new-orders component of the manufacturing index, which makes up about a third of the total, rose to 57.1 from 55.8 in February. The production component, a measure of work being performed, fell to 56.5 from 56.7. The employment gauge dropped to 53.3 from 57.4. The prices-paid component jumped to 73 from 65.5.
The business-funded institute also accidentally released its index of non-manufacturing activity, which normally would have been made public Tuesday.
Terri Tracey, spokeswoman for the group, said “the numbers have not had a final proofing,” but added that “it’s rare there are changes.” She said the 63.1 reading “is firm.”
The non-manufacturing index captures activities in business such as entertainment, finance and banking, transportation and business services.
The report on consumer sentiment suggested that record gasoline prices and concerns about the job market are weighing on the public’s confidence. The index for March dropped to 92.6, the lowest since October, from 94.1 in February.
The current conditions index, which reflects Americans’ perception of their financial situation and whether it’s a good time to buy big-ticket items, fell to 108 from 109.2 in February. The expectations index, based on optimism about the next one to five years, fell to 82.8 from 84.4.
“What drags down the expectations are the energy prices, and gasoline has made it back up over $2 again and by all indications it’s not going to recede anytime soon,” said Ellen Beeson, an economist at Bank of Tokyo-Mitsubishi Ltd. in New York.
In a fourth report, the Commerce Department said construction spending rose for a 13th consecutive month in February, led by home building and public works. The 0.4 percent increase boosted total spending to a record $1.05 trillion at an annual pace.
The stretch of recent increases is the longest since the government began keeping records in 1993.
Private residential construction, which accounts for more than half of the total, rose 0.7 percent, to an annual rate of $578.7 billion. Government-funded construction jumped, to $239.9 billion.
