The Institute for Supply Management (ISM) has released its Manufacturing ISM Report on Business for the month of March. The number is above the 50.0 breakeven level, but it was a full pint shy of the Bloomberg consensus estimate — at 51.5% versus the 52.5% consensus.

March’s ISM report indicates that economic activity in the manufacturing sector expanded for the 27th consecutive month. It also indicated that the overall economy grew for the 70th consecutive month.

While this was still expansion, it was less than economists were expecting. It was actually a decrease of 1.4 percentage points from February’s reading of 52.9%. Other indicators in the report were as follows:

• The New Orders Index registered 51.8%, a decrease of 0.7 percentage point from the reading of 52.5% in February.
• The Production Index registered 53.8%, 0.1 percentage point above the February reading of 53.7%.
• The Employment Index registered 50.0%, 1.4 percentage points below the February reading of 51.4%, reflecting unchanged employment levels from February.
• Inventories of raw materials registered 51.5%, a decrease of 1 percentage point from the February reading of 52.5%.
• The Prices Index registered 39%, 4 percentage points above the February reading of 35%, indicating lower raw materials prices for the fifth consecutive month.

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Issues that were cited as drags in the report were the West Coast port backup from the strike, lower oil prices, residual effects of the harsh winter, higher costs of health care and the stronger dollar. Of the 18 manufacturing industries, 10 of them reported growth in March, in the following order:

• Paper Products
• Wood Products
• Transportation Equipment
• Fabricated Metal Products
• Nonmetallic Mineral Products
• Machinery
• Chemical Products
• Primary Metals
• Food, Beverage & Tobacco Products
• Computer & Electronic Products

Seven industries reported contraction in March, in order as follows:

• Apparel, Leather & Allied Products
• Textile Mills
• Petroleum & Coal Products
• Electrical Equipment, Appliances & Components
• Miscellaneous Manufacturing
• Plastics & Rubber Products
• Furniture & Related Products

Maybe this should be good rather than bad for the markets. After all, it is still growth but not such strong growth that the Federal Reserve has to rethink being patient or data dependent.

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