U.S. report paints bleak manufacturing picture
A key U.S. economic survey indicates that the manufacturing sector is struggling and will face further problems.
The closely watched Purchasing Managers Index (PMI), which measures the state of U.S. manufacturing, hit its lowest level in October since 1982, the Institute for Supply Management reported Monday.
"It appears that manufacturing is experiencing significant demand destruction as a result of recent events," Norbert J. Ore, chair of the group's survey committee, said in a release.
Moreover, the rate of decline was significantly faster in October than in September.
The PMI was 38.9 in October, down from 43.5 in September. The index is based on a survey of purchasing managers, and is highly regarded because those people are deeply involved with the operations and future plans of their companies.
The PMI is correlated with economic growth through the whole U.S. economy, and a level of 38.9 suggests the economy will shrink 0.7 per cent over the next year, Ore said.
Every indicator the survey assessed got worse in October. Indexes for new orders, production and employment all fell by more than 6.5 percentage points.
The price index plunged 16.5 points, removing any fear of inflation.
The export index dropped 11 points, the first decline after 70 months of gains, Ore said.
Over half affected by market turmoilThe institute asked a special question about the impact of the turmoil in financial markets in the October survey.
The results were universally grim, with just over half of those who responded saying they or their suppliers had been affected.
The impacts:
Credit was harder to get, 44.6 per cent said.Credit was more expensive, 40.8 per cent said.There were problems in getting or renewing a bank credit line, 24.7 per cent said.Spending and/or hiring has been cut, 78.6 per cent said.Only two industries reported growth in October: apparel and leather, and computer and electronic products.
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