"While manufacturers are benefiting from strength in new orders and production, there is significant concern with regard to commodity prices," he said.
"Many manufacturers indicate the prices they have to pay for inputs are rising, and there is concern about the impact of higher prices on their margins.”
The index of prices paid increased to 85 from 82, the highest since July 2008. A measure of supplier deliveries increased to a one-year high of 63.1 in March, indicating longer lead times.
Of the 18 manufacturing industries in the index, 15 reported growth in March, including apparel, transportation equipment and machinery.
The PMI indicates growth for the 22nd consecutive month in the overall economy and their relationship could correspond to a 6.5 percent increase in real gross domestic product (GDP), Ore said.
The ISM’s production index increased to 69, up from 66.3 in February and the highest since January 2004. The new orders measure fell to 63.3 from 68, while the gauge of export orders decreased to 56 from 62.5.
The employment gauge fell to 63 from 64.5 in the prior month, the 18th consecutive month of growth.
The Labor Department reported that the economy added 216,000 jobs in March, while the unemployment rate dropped to 8.8 percent, as the labor market continues to improve.
The manufacturing sector added 17,000 jobs last month, down from 33,000 in February.
"The good news is that manufacturing once again gained jobs," said Scott Paul, executive director of the Alliance for American Manufacturing. "The bad news is that it isn’t enough. This modest growth in factory employment is completely inadequate. We’re still waiting for Congress to pass even a single measure that will substantially increase manufacturing jobs. With the economy at the top of mind for most voters, Washington is still barking up the wrong tree."