NEW YORK (CNNMoney.com) - Manufacturing growth slowed in March, according to a closely watched survey of industry executives released Monday.

The Institute of Supply Management said its manufacturing index dipped to 55.2 last month from 56.7 in February -- a reading that was below the average forecast of 57.7 from economists surveyed by Briefing.com.

"This is something of a surprise, given the relative strength of most of the regional surveys. The latter are not always a perfect guide to the national ISM but they rarely send such a clear, but wrong, signal," Ian Shepherdson, chief U.S. economist at High Frequency Economics told Reuters.

Any reading above 50 indicates growth in the manufacturing sector of the economy, and last month's number marked the 34th straight month of growth. Any number below 50 represents a contraction in activity.

Norbert Ore, the chairman of the Institute's Manufacturing Business Survey Committee said in an accompanying statement that strength in new orders and production fueled growth in March, but that prices paid, an key inflationary gauge, was worrisome.

The institute said its prices paid index jumped to 66.5 in March from February's 62.5, indicating manufacturers are paying higher prices.

Some manufacturers quoted in the survey pointed at persistently high energy prices as well as the increasing cost for metals and some other raw materials.

"Overall it doesn't look too bad. The prices paid is a concern," Paul Nolte, director of investments at Hinsdale Associates in Hinsdale, Illinois told the news service. "We'd like to see it come down a little."

The number comes less than a week after the Federal Reserveraised interest rates for the 15th straight time in a bid to ward off inflation and prevent the U.S. economy from expanding too rapidly.

--from staff and wire reports

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