Manufacturing Rises in March, but Winter’s Torrid Pace Slows : Economy: Purchasing managers report orders improved following bad weather in East and Northridge earthquake.

American manufacturing expanded for the seventh straight month in March, although the rate of growth slowed from February’s levels, according to a survey of corporate purchasing managers released Monday.

The monthly assessment by the National Assn. of Purchasing Management substantiated other evidence that the U.S. economy is strengthening. But it indicated that the torrid pace of the winter months has cooled.

The group said its index of manufacturing activity rose to 56.7% from 56.6% in February. A reading above 50% indicates that the manufacturing economy is expanding, while a reading below 50 indicates it is shrinking.

“We had a very strong month of production in March,” said Robert J. Bretz, chairman of the association’s business community and purchasing director at Pitney Bowes Inc. “New (manufacturing) orders continued to expand, but the rate of growth seems to be leveling off in new orders and backlog of orders,” he said.

The purchasing managers’ survey is widely followed because it offers some of the freshest information on the economy’s health.

The group said 14 of 20 industries surveyed reported an improvement in March as many businesses recovered from the disruptions caused by harsh winter weather and the California earthquake.

Philip Braverman, chief economist at DKB Securities Corp., said the report was “consistent with the view that the economy had picked up and is now showing some signs of tiring. It’s holding its gains overall, but it doesn’t suggest any forward momentum, particularly now that we’re out of the time zone where we can blame bad weather.”

Prices, a key indicator of inflation, continued to rise in March, but at a more subdued rate than in February. The association’s price index fell to 64.2% in March, from 67% in February.

Stock and bond prices have fallen sharply the past few months as the Federal Reserve has raised short-term interest rates in response to inflation worries spurred by a rise in commodities prices.

“The rate of growth that we had over the fourth quarter and the first month in this quarter just can’t be sustained,” Bretz said.

He added that as the pace of the recovery slows, a decline in demand for goods should ease the upward pressure on prices.

“We probably should see some increases here or there, but overall we should start to see some slowing in price increases.”

The survey indicated that economic growth would continue. New orders to manufacturers, a harbinger of future production levels, rose at about the same high rate as in February.

The purchasing managers report also said:

* Inventories declined in March to the lowest level since December, 1991.

* After ending a 57-month slide in February, employment resumed a decline in March as well.

* Production surged higher in March, after falling in February because of weather-related problems.

* New export orders continued to rise in March, but at a significantly lower rate than in February.

* Imports grew for the fifth straight month, but at a slightly slower pace than in February.

Purchasing Managers’ Index

This tracks the overall business activity of more than 300 industrial companies. March, 1993: 53.4% March, 1994: 56.7%

Source: National Assn. of Purchasing Management