Manufacturing Growth drops to a 28-Year Low
US manufacturing activity in December came in weaker-than-expected, falling to a 28-year low, making it the fifth straight month of decline and the lowest mark since June 1980.
The Institute for Supply Management (ISM) said its manufacturing activity index nationwide fell to 32.4 overall, from 36.2 in November.
Norbert Ore, chairman of the Institute for Supply Management's business committee, said the rapid pace of decline covers the full breadth of manufacturing industries.
Manufacturing activity continued to decline at a rapid rate during the month of December. The decline covers the full breadth of manufacturing industries, as none of the industries in the sector report growth at this time, Ore said.
New orders have declined for 13 straight months and are at the lowest level on record going back to January 1948, Ore said. Order backlogs have fallen to the lowest level since ISM began tracking the Backlog of Orders Index in January 1993. Manufacturers are reducing inventories and shutting down capacity to offset the slower rate of activity.
The ISM employment component remain in deep contraction at 29.9 from the previous 34.2 level, representing a fifth month of protracted slowdown and the worst level since November 1982.
Any reading over 50 signals growth while below 50 indicates contraction. Results are based on a survey of manufacturing executives, who give their opinions on 10 sub components.
On the positive side, prices continued to deflate for the third month in a row. At 18.0, this is the lowest level since 1949. As recently as June, prices were at 91.5.
The report is a national survey of purchasing managers in the manufacturing sector.
In other parts of the world, Released data from manufacturing were equally discouraging.
Manufacturing activity in the euro zone contracted to a record low in December. A report showed that one index of European manufacturing dropped to 33.9 in December while a German manufacturing index fell to 32.7, more of a decline than had been anticipated
Asian's stock markets took Friday's figures in stride, with the Hang Seng index in Hong Kong gaining 4.5 percent. Stocks in Shanghai fell a moderate 0.7 percent, and the benchmark indexes in South Korea and Singapore both rose more than 2 percent. Shares in Europe were higher. In London, the FTSE 100 was 1.1 percent higher while the CAC 40 in Paris was up 2.2 percent and the DAX in Frankfurt, 2 percent.
However, investors shrugged off gloomy manufacturing data on Friday. At 10:44 am ET, the Dow Jones Industrial Average gained 97.41 points or 1.11% to finish at 8,873.80. The S&P 500 added 8.53 points or 0.94% to 911.78. The Nasdaq Composite jumped 19.33 points or 1.23% to 1,596.36.
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