UPDATE 1-U.S. manufacturing sector expansion slows in March -ISM

Mon Apr 1, 2013 10:19am EDT

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NEW YORK, April 1 (Reuters) - The pace of expansion in the U.S. manufacturing sector unexpectedly slowed in March as the rate of new orders dropped, an industry report showed on Monday.

The Institute for Supply Management said its index of national factory activity fell to 51.3 from 54.2 the month before. The reading was shy of expectations of 54.2 according to a Reuters poll of economists.

U.S. stocks slightly extended losses immediately after the data, while Treasuries turned higher. A reading above 50 indicates expansion in the manufacturing sector, while a number below 50 means contraction.

The new orders index fell to 51.4 from 57.8. The prices paid gauge slid to 54.5 from 61.5, compared to expectations of 59.8.

Inventories contracted, falling to 49.5 from 51.5. The employment gauge improved to 54.2 from 52.6, which boded well for the U.S. unemployment report due at the end of the week.

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