Thread: US manufacturing slumps to 1980 low: Institute of Supply Man

US manufacturing slumps to 1980 low: ISM

10 hours ago

WASHINGTON (AFP) — US manufacturing contracted for the fifth consecutive month in December to a 1980 low amid a sharp Asian slowdown and deepening recession in the world's biggest economy, a survey showed Friday.

The Institute of Supply Management (ISM) said its key manufacturing index dropped 3.8 percentage points from November to 32.4 percent, far below the 50 percent level that separates expansion and contraction.

It was below the economists' consensus estimate of 35.4 percent and, according to the institute, the lowest reading since June 1980, when the index hit 30.3 percent.

The machinery market in Asia had virtually shut down, respondents told a survey by the institute, which is a top supply management group based in Tempe, Arizona.

A reading above 50 percent indicates that the manufacturing economy is generally expanding while that below 50 percent signals it is generally contracting.

"Manufacturing activity continued to decline at a rapid rate during the month of December," ISM said in a statement.

"The decline covers the full breadth of manufacturing industries, as none of the industries in the sector report growth at this time."

New manufacturing orders, captured by another ISM index, have contracted for 13 consecutive months, and are at the lowest level on record going back to January 1948, the institute said.

Manufacturers, it said, were reducing inventories and shutting down capacity to offset the slower rate of activity caused by a prolonged recession.

In the machinery sector, respondents to an ISM survey said Europe "has slowed down dramatically, while Asia -- particularly China -- has virtually shut down."

Analysts pointed out that there was no sign that the US industrial activity decline was easing, citing the new numbers.

"Notably, there is no sign in the December report that the pace of manufacturing decline is yet bottoming," said Peter Kretzmer, senior economist with Bank of America.

Eurozone manufacturing activity fell to a record low in December while China's manufacturing sector is close to a technical recession after output contracted at a record pace in the last month of 2008, according to figures released Friday.

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I don't understand why economists in this country are not putting the downturn into reality in addressing statistics. Shipping factories out of this country deprives Americans of jobs. Americans that have lost jobs will not consume willy-nilly, and the supply has exceeded demand.

Originally Posted by vortex

I don't understand why economists in this country are not putting the downturn into reality in addressing statistics. Shipping factories out of this country deprives Americans of jobs. Americans that have lost jobs will not consume willy-nilly, and the supply has exceeded demand.

Absolutely, that is just common sense.