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NEW YORK (CNN/Money) -
Manufacturing growth slowed in February, coming in below forecasts on Wall Street, a closely watched survey of purchasing managers showed Tuesday.
The Institute of Supply Management said its purchasing managers index fell to 55.3 from 56.4 in February. Any reading above 50 indicates growth in the sector.
Economists surveyed by Briefing.com had forecast the index would rise to 57.
The group acknowledged that the pace of growth was slowing, but painted a positive long-term portrait of the manufacturing industry.
"February was another good month in the manufacturing sector," Norbert Ore, chairman of the group's business survey committee, said in a statement. "While the overall rate of growth is slowing, the overall picture is improving as prices increase and shortages are becoming less of a problem."
"Exports and imports remain strong," Ore added.
The group said its prices paid index fell to 65.5 from 69 in January and the employment index slipped to 57.4 from 58.1 the prior month.
The manufacturing recovery "has matured," said John Lonksy, chief economist for Moody's Investors Service, adding that the report was "solid," but "by no means spectacular."
Analysts had been expecting an increase in the overall index in part due to recent favorable readings in regional manufacturing reports: the Chicago PMI jumped to 62.7 from 62.4 Monday, and the Philadelphia Fed surged to 23.9 from 13.2, Lonsky said.
"The thought was that the national index would follow suit, but that was by no means the case," he added.
Mark Zandi, chief economist at Economy.com, said manufacturing growth has been driven by the need to rebuild inventories, but that need had passed.
"The largest source that drove the very strong growth over the last year was this powerful replacement cycle, which is fading," said Zandi. "The need to replace inventory is over."
Rich Yamarone, director of economic research at Argus Research, said he had projected that the ISM would fall even further, to 52.5, and economists who projected an increase were "forecasting on hopes, rather than what the data says."
"The manufacturing expansion is running out of gas," said Yamarone.
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