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U.S. manufacturing activity contracted in March, ending a quarter that was the weakest since the second quarter of 2003, according to the Institute for Supply Management. Its key purchasing managers' index for manufacturing rose to 48.6 in March from 48.3 in February, but only readings of more than 50 indicate expansion.
The employment portion of the index also rose, to 49.2 in March, but still short of the 50 needed to show expansion. Its reading was 46.0 in February.
"Manufacturers' order backlogs continue to erode as the new orders index failed to grow for the fourth consecutive month," said Norbert Ore, chair of the institute's manufacturing business survey committee. "Additionally, manufacturers continue to experience heavy cost pressures as the prices they pay are still rising even with slower overall demand."