Weak December NAPM points to imminent US slowdown
By Chris Stetkiewicz
Monday January 4, 11:23 am Eastern Time
(Note: this article is ''in progress''; there will likely be an update soon.)
NEW YORK, Jan 4 (Reuters) - U.S. manufacturing activity slowed in December for the seventh straight month, an industry group said on Monday, reaffirming analysts' views that the overall economy will slow sharply in the months ahead.
The National Association of Purchasing Management (NAPM) reported its index of manufacturing activity fell to its lowest level in more than seven years.
''Manufacturing is bearing the brunt of the Asian recession and the issue is how long it will take for the rest of the U.S. economy to feel the ripple effects. I think you'll see it fairly quickly, possibly in the first quarter of 1999, certainly within the first half,'' said Paul Kasriel, chief domestic economist at Northern Trust.
NAPM said its main manufacturing index fell to 45.1, its worst showing since May 1991, from 46.8 in November.
Analysts polled by Reuters had forecast, on average, that the index would rise to 47.3 in December.
A reading below 50 suggests contraction in manufacturing. The last time the index was above 50 was May 1998, when it stood at 51.4.
Most of the nine NAPM sub-indices stood at or near their lowest levels in the 68-year history of the report, said Norbert Ore, chairman of NAPM's business survey committee.
''Both production and new orders (indices) declined, signaling that the manufacturing sector is obviously struggling,'' Ore said.
In addition, the employment sub-index fell to 40.8 from 44.9, suggesting a decline of 20,000 to 30,000 manufacturing jobs in December, which could slow consumer spending heading into 1999.
Many economists expect U.S. gross domestic product growth to slow to 2 percent or less in the first quarter of 1999 after an estimated annualized growth rate of about 3.5 percent in the fourth quarter of 1998.
''This is a very weak report. It's not anything to worry about just yet, but if the numbers persist as weak as this, that would be reason for worry,'' said Marilyn Schaja, an economist at Donaldson Lufkin & Jenrette Securities Corp.
(Note: this article is ''in progress''; there will likely be an update soon.)
|
