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US manufacturing disappoints
January 3, 2009, Saturday
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Print Edition
Print Edition
US manufacturing activity fell more than expected in December, hitting the lowest level in 28 years as new orders and employment continue to decline.
The Institute for Supply Management, a trade group of purchasing executives, said yesterday that its manufacturing index fell to 32.4 in December from 36.2 in November. Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5.
Component readings of the index hit historic lows. New orders fell to their lowest level on records going back to 1948. Prices fell as the number of respondents saying they had paid more in December than in November sank to its lowest monthly reading since 1949.
Any reading for the overall index above 50 signals growth, while a reading below 50 indicates contraction.
The index, which is based on a survey of the institute's members, has fallen steadily for the past five months as the economy deteriorated.
The index fell to its lowest level since June 1980, when the economy was near the end of a six-month recession.
Investors shrugged off the grim report on the new year's first day of trading, eager to start fresh after the losses of 2008.
Stocks were higher in late-morning trading, with the Dow Jones industrial average up about 130 points, at the 8,908 level. Broader indexes were also higher.
Only three recessions in the history of the index have showed weaker manufacturing readings, said John Ryding, of RDQ Economics.
Those recessions were in 1948 to 1949, 1973 to 1975 and 1980.
With European manufacturing indexes also dropping, "the case for a massive global fiscal stimulus continues to grow," Ryding said.
As the economy sputters through a recession that began in December 2007, no industry is proving resistant. No sector reported overall growth in December. Also, none reported growth in new orders, production, employment or prices, as many businesses experienced declines.
The employment index showed its lowest reading since 1982. The sector lost 85,000 jobs between October and November, according to the latest data from the Bureau of Labor Statistics.
The Institute for Supply Management, a trade group of purchasing executives, said yesterday that its manufacturing index fell to 32.4 in December from 36.2 in November. Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5.
Component readings of the index hit historic lows. New orders fell to their lowest level on records going back to 1948. Prices fell as the number of respondents saying they had paid more in December than in November sank to its lowest monthly reading since 1949.
Any reading for the overall index above 50 signals growth, while a reading below 50 indicates contraction.
The index, which is based on a survey of the institute's members, has fallen steadily for the past five months as the economy deteriorated.
The index fell to its lowest level since June 1980, when the economy was near the end of a six-month recession.
Investors shrugged off the grim report on the new year's first day of trading, eager to start fresh after the losses of 2008.
Stocks were higher in late-morning trading, with the Dow Jones industrial average up about 130 points, at the 8,908 level. Broader indexes were also higher.
Only three recessions in the history of the index have showed weaker manufacturing readings, said John Ryding, of RDQ Economics.
Those recessions were in 1948 to 1949, 1973 to 1975 and 1980.
With European manufacturing indexes also dropping, "the case for a massive global fiscal stimulus continues to grow," Ryding said.
As the economy sputters through a recession that began in December 2007, no industry is proving resistant. No sector reported overall growth in December. Also, none reported growth in new orders, production, employment or prices, as many businesses experienced declines.
The employment index showed its lowest reading since 1982. The sector lost 85,000 jobs between October and November, according to the latest data from the Bureau of Labor Statistics.
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