Factory activity contracted at a slower rate in March

Activity in US factories contracted for the second month running in March, but the figure was still better than economists had been expecting.

The Institute for Supply Management's (ISM) factory activity index rose to 48.6 from February's 48.3. A reading below 50 indicates shrinking output.

February's report recorded the weakest manufacturing activity for five years.

The report's inflation data showed that US prices are rising at the fastest rate in 3 years.

Economist says that despite a slight improvement in March, the data still shows that US industry is in a slump.

"The fact that the headline index didn't fall and picked up slightly is slightly misleading," said Richard Iley at BNP Paribas in New York.

"It is still indicating a very soft manufacturing sector that is likely in recession."

Falling car sales

In another sign of weak factory activity, Ford said its sales in the US in March fell by 14% compared with the same month in 2007.

The auto giant blamed a "turbulent economy" for the decline and said it would continue to focus on its reorganisation plan aimed at making it profitable at lower volumes.

Sales of Ford's market-leading F-Series pickup trucks were down almost 24%.

The overall figures included sales by Jaguar and Land Rover, which were sold to India's Tata Motors during the month.



