02.04.201822:28:00UTC+00U.S. Factory Activity Slowed in March - ISM

U.S. factory activity slowed in March amid shortages of skilled workers and rising capacity constraints, but growth in the manufacturing sector remains buoyed by strong domestic and global economies.

According to the survey of the Institute for Supply and Management, a surge in the cost of raw materials and worries among manufacturers about the impact of steel and aluminum import tariffs imposed by President Donald Trump last month to shield domestic industries from what he has described as unfair competition from other countries.

The ISM said its index of national factory activity slipped to a reading of 59.3 last month from 60.8 in February. A reading above 50 in the ISM index indicates growth in manufacturing, which accounts for about 12 percent of the U.S. economy.

The survey's prices index soared to its highest level since April 2011. There were price increases across 17 of 18 industry sectors last month. While a measure of new orders dropped, a gauge of backlog orders rose to levels last seen in May 2004.

The survey's customers' inventories index was at its lowest level since July 2011. A measure of factory employment dropped last month and the ISM said there were indications that labor and skill shortages were affecting production.

U.S. financial markets were little moved by the data, with investors worrying about a global trade war after China increased tariffs by up to 25 percent on 128 American products in response to the duties on aluminum and steel imports.

Nonetheless, the outlook for manufacturing remains upbeat amid dollar weakness, which is boosting the competitiveness of American-made goods on the international market.