U.S. manufacturing grows as output, employment rise

American factories stepped up hiring and production in March, the latest evidence that manufacturing is growing at a healthy pace and fueling the nation’s slow economic recovery. The Institute for Supply Management, a trade group of purchasing managers, reports this morning that its index of manufacturing activity rose to 53.4 in March. That’s up from 52.4 in the previous month. Readings above 50 indicate the sector is expanding. A measure of employment in the sector rose to a nine-month high, a sign that factories are stepping up hiring. Manufacturers are already a big source of job gains. They’ve added more than 100,000 jobs in the past three months, about one-seventh of all net gains. Increasingly confident U.S. consumers and businesses are spending more on cars, machinery and other goods, pushing up factory output. A gauge of production rose to its highest level in three months in March. Manufacturing has been a key source of economic growth since the recession ended in June 2009. The sector has expanded for 32 straight months, according to the ISM’s index. A recovery in auto sales has contributed significantly to the strength in manufacturing. Americans delayed auto purchases during the recession, pushing the average age of U.S. cars to record highs. Sharp increases in car sales ensued as the economy recovered. Rising factory output is helping the broader economy grow. Growth increased to a 3% annual rate in the final three months of last year, up from 1.8% in the previous quarter.