Manufacturing, Construction Power Economy

The pace of U.S. manufacturing accelerated in March as increased domestic demand exceeded a drop in exports, and record construction activity suggested that a resilient economy was shaking off any drag from Asia’s crisis, two reports showed Wednesday.

A third report showed a key forecasting gauge posting a sharper-than-expected February gain, which analysts said meant the expansion has more room to run.

The National Assn. of Purchasing Management’s index rose to 54.8 last month from 53.3 in February. At the same time, the NAPM price index, considered by some an indication of the inflation rate, fell to 44.4 from 45.8. That’s the lowest index reading since July 1996 and suggests prices paid by manufacturers are declining at a faster pace.

“This illustrates the new paradigm--strong growth and no inflation,” said Christopher Rupkey, an economist at Bank of Tokyo-Mitsubishi in New York.

A reading above 50 indicates an expanding economy, and March was the 83rd consecutive month the index was above that mark. Production and new orders both were stronger than in February, while prices declined.

In further signs of the economy’s vigor, the index of leading U.S. economic indicators rose 0.4% in February--the biggest increase in a year--after rising 0.1% in January. And construction spending grew 0.3% in February to a record level, following a 0.7% January gain.

The Conference Board’s February index of leading indicators was powered by a rising money supply, soaring stock prices and applications for building permits.

The immediate boost to the economy was evident in its separately calculated index of coincident indicators that measures current conditions. It rose 0.3% in both February and January.

The U.S. economy entered its eighth year of unbroken growth in March.

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Purchasing Managers Index

March: 54.8

Source: National Assn. of Purchasing Management

Bloomberg News and Reuters were used in compiling this report.