U.S. manufacturers weakest in 7 years: ISM index
American manufacturers posted their worst showing in seven years in September, according to figures released Wednesday by the Institute of Supply Management.
The Tempe, Ariz., organization said manufacturing activity across the country dropped nearly 13 per cent in September compared to August, and now stands at its lowest level since October 2001.
The September ISM index stood at 43.5 per cent, down 6.4 percentage points from August's reading of 49.9 per cent.
"The [index] indicates a significantly faster rate of decline in manufacturing during September, marking a departure from the 2008 trend toward negligible growth or contraction each month," said Norbert Ore, chair of the ISM's manufacturing business survey committee.
The well-followed index surveys corporate purchasing managers and asks questions in various categories, such as new orders and employment. The responses are of the "better-same-worse" variety.
The institute then calculates its index based on the survey results.
An overall figure greater than 50 per cent indicates a growing manufacturing sector while a result below 50 per cent shows an industry that is contracting.
ISM Index of Manufacturing Activity Index (%) September '08 43.5 August '08 49.9 July '08 50.1 12-month average 49.0 Source: Institute of Supply ManagementSince hitting a yearly peak in July, U.S. manufacturing activity has been dropping as the global financial crisis has intensified.
New orders showed an even weaker picture for American manufacturing.
The September index stood at 38.8 per cent, 20 per cent less than August's figure.
In this category, a number greater than 51.6 per cent is generally consistent with a growing goods-making sector, the ISM said.
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