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New York (AFP) – The US manufacturing sector grew faster than expected last month but exports weakened to their lowest level in more than two years, according to a survey released Monday.

Boosted by a strong employment reading, the Institute for Supply Management’s monthly manufacturing index pointed to steady expansion at the end of the first quarter.

The closely-watched index rose just over a point to 55.3, overshooting economists’ expectations but remaining below the 12-month average. Any reading above 50 indicates growth.

Timothy Fiore, chair of ISM’s manufacturing survey, said the result was an encouraging sign after weakening in recent months amid the US-China trade war.

The survey showed gains in new orders, production and employment while deliveries and inventories fell.

But export activity hit its lowest level since October 2016, falling 1.1 percent from February to just 51.7 percent.

“I think we’re continuing in a steady state,” Fiore told reporters. “I would like to see the new export order come up. We’re down to recent historic lows and that’s just not a long-term good thing.”

“I think the US is in good shape, especially if we can resolve the trade issues,” he said.

He noted energy costs remained competitive while the Federal Reserve had confirmed it would hold off raising interest rates in the near-term and Chinese manufacturing showed some signs of recovery.

Sixteen of 18 manufacturing sectors recorded growth for the month while the apparel and paper products sectors shrank.

Respondents said labor remained in short supply, with unemployment at low levels.

US and Chinese officials say they are in the home stretch of negotiations to resolve their trade war, which has hit the manufacturing sectors on both sides, but have not guaranteed a successful outcome.

Economists have said the US manufacturing sector could even fall into recession as a result of the trade war but Jim O’Sullivan of High Frequency Economics said Monday the current figures pointed to a less severe decline.

“The data are signaling moderate rather than dramatic net slowing in manufacturing,” he wrote in a note to clients.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.