U.S. Manufacturing Index improves in March

U.S. factory activity expanded in March for the first time since last summer, a sign the nation’s economy is slowly recovering from the effects of a strong dollar and depressed oil prices. The Institute for Supply Management’s gauge of manufacturing activity rose to 51.8 in March from 49.5 in February. The gains reflected solid demand from domestic consumers who once again are proving to be resilient in the face of overseas uncertainty.

The improvement is largely driven by domestic orders and that’s driven by consumer spending. The uptick in manufacturing data should reduce concerns that the U.S. economy is slipping into recession. We believe that manufacturing will not add much to growth in 2016, but neither will it subtract much. Instead, service industries and construction will lead the U.S. economy forward.