The News: More Shrinkage for U.S., Global Manufacturing Sectors
- Jan 06, 2009
The U.S. manufacturing sector is taking a continuing hit from the contracting economy, according to the Institute for Supply Management’s monthly survey of purchasing managers. A multi-front pullback in activity suggests softening demand for distribution, manufacturing and other industrial space requirements.“Manufacturers are reducing inventories and shutting down capacity to offset the slower rate of activity,” said Norbert Ore, chair of the institute’s manufacturing survey committee, in a statement. According to the organization’s monthly Purchasing Managers Index, manufacturing activity continues to contract at an accelerating pace. The Institute for Supply Management disclosed that the index plummeted to 32.4 percent, its lowest level in 28 years. Based on a monthly nationwide survey of purchasing managers, this figure represents a 3.8 percent drop from the previous month.Historical lows also surfaced in several of the index’s 10 subcategories, which range from production to exports and imports. New orders dropped to 22.7 percent, the lowest in the category’s 60-year history. Underscoring the breadth of the downturn, none of the 18 manufacturing industries surveyed for the monthly report showed growth in new orders last month. From September through December, the new orders index dropped 16.1 percent.Employment, too, proved a no-growth area. The survey’s employment index fell to 29.9 percent in December, the poorest showing since December 1982’s 28.2 percent. Manufacturers’ inventories also slipped, though much less dramatically than many other categories: The 38.8 percent index for December lost only three-tenths of 1 percent from November’s rating, but it has declined from 43.4 percent in September.Emphasizing the ties that bind economies, the global manufacturing sector also reached toward a new low in December, according to JPMorgan Chase & Co.’s monthly survey. At 33.2 percent, the JPMorgan Global Manufacturing PMI reflected record or near-record lows for most national manufacturing and new orders indexes. All told, the global manufacturing sector registered its worst year since 2001.