Economic activity in the manufacturing sector expanded in March but at a slower pace than in February, according to the Institute for Supply Management’s purchasing managers index for US manufacturing. And firms taking part in the report indicated the labor market as a constraint to production.

March’s index reading was 59.3, down from February’s reading of 60.8. Any reading above 50% generally indicates improving conditions.

The employment portion of the index also declined to a reading of 57.3, down from the February reading of 59.7.

“Employment expansion remains strong, with many companies struggling to hire skilled workers and indirect personnel to replace natural attrition, and to some extent, an increase in turnover,” said Timothy Fiore, chair of the Institute for Supply Management manufacturing business survey committee. “Many respondents see the labor market as a constraint to production.”