In a report issued today, the Institute for Supply Management said the much-watched PMI index was 62.5% in March, up 1.1 points over February. New orders declined 0.7 point, to 65.7%. Production rose 1.6 points, to 65.5%.

The PMI has been above 60% for five consecutive months. A mark above 50% is considered a sign of a growing market.

In a statement, ISM chair Norbert J. Ore said, "The first quarter was very strong for the manufacturing sector and the economy overall. Our survey respondents generally indicate that business is quite strong."

Order backlogs increased in March, and the employment index grew for the fifth consecutive month. Manufacturers once again experienced higher prices in their purchases, and at the highest rate since January 1995.

New export orders accelerated significantly during the month, and imports grew too.

Purchasing and supply managers said higher energy and material costs, material availability and the weaker dollar were hot issues. As leadtimes extend, their concerns are shifting from cost issues to availability.

Inventories dropped a fraction, while inventories held by customers rose slightly but is still considered too low by historical measures.

Commodities reported up in price included chemicals, copper and memory components, among others.