Business activity in the U.S. increased by more than had been anticipated to close the first quarter of the year, indicating that manufacturing continues to drive overall economic growth despite a decrease in factory orders, according to Bloomberg. On Thursday, the Institute for Supply Management-Chicago reported that its business activity index dropped to 70.6 in March from the 23-year high recorded the prior month, although the reading still indicated that growth in activity was stronger than the 69.9 reading that economists had expected.

Jim O’Sullivan of MF Global said the takeaway from the report was “continued strength in manufacturing.” However, the gauge of new orders dropped almost a point and a half to 74.5 as backlogs jumped nearly eight points to 69.6, which is the highest level since 1974. Meanwhile, a separate report from the Commerce Department showed that factory orders in the U.S. unexpectedly decreased in February, falling 0.1% after a 3.3% gain the month prior. The drop was the first decrease in four months, and could indicate that companies are tempering spending until the outlook for the economic recovery becomes more clear.

Click here to read the story on business activity from Bloomberg News.

Click here for coverage of factory orders from Bloomberg News.