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Components of index fall to levels last seen in 1940s
By Ellen Simon
Associated Press
Published on Saturday, Jan 03, 2009
NEW YORK: The economy could turn even weaker in 2009, as an index of December manufacturing activity sank Friday to its lowest point in 28 years. Every corner of the sector was down, from bakeries to cigarette makers to aluminum smelters.
The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index fell to a measurement of 32.4 in December, a greater-than-expected decline from November's reading of 36.2. Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5.
Components of the index hit historic lows. New orders fell to their lowest level on records dating 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.
A reading below 50 for the overall index indicates contraction. The index, based on a survey of the institute's members, steadily has fallen for the last five months as the
economy has deteriorated.
December's reading is the lowest since June 1980, when the economy was near the end of a six-month recession.
If December's rate of manufacturing activity were to persist for 2009, the nation's gross domestic product would show a 2.7 percent contraction, said Norbert Ore, chairman of the group's business survey committee.
The GDP, the broadest measure of economic activity, decreased at an annual rate of 0.5 percent in the third quarter of 2008, according to the Bureau of Economic Analysis.
Only three recessions in the history of the index have showed weaker manufacturing readings, said John Ryding, of RDQ Economics. Those recessions were in 1948-49, 1973-75 and 1980.
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 businesses from tobacco to coal products to food makers saw declines.
Declining prices, coming after the summer's soaring market for commodities, have sent manufacturers — especially in chemicals and metals — reeling.
The summer's commodity bubble was devastating for many food processors. Pilgrim's Pride Corp., the nation's largest chicken producer, filed for Chapter 11 bankruptcy protection on Dec. 1.
With the overall unemployment rate at 6.7 percent in November, the highest in 15 years, manufacturing continues to be one of the hardest-hit sectors. The sector lost 85,000 jobs between October and November, according to the most recent data from the Bureau of Labor Statistics.
The purchasing managers' employment index showed its lowest reading since 1982 as manufacturers cut jobs.
Automotive supplier Visteon Corp. said Friday it will shift more than 2,000 workers to a four-day week and cut their pay by 20 percent as auto sales continue to founder.
NEW YORK: The economy could turn even weaker in 2009, as an index of December manufacturing activity sank Friday to its lowest point in 28 years. Every corner of the sector was down, from bakeries to cigarette makers to aluminum smelters.
Get the full article here.
Comments
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Posted 10:17 AM, 01/03/2009
Very little manufacturing is done here, anyway. If China quits developing as a country, it is a good thing
Posted 11:16 AM, 01/03/2009
Thank you "supply side economics"
