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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: SecularBull who wrote (124893)	2/1/2001 11:51:11 AM
From: peter a. pedroli	Respond to of 769670

The NAPM production index tumbled to its lowest point since May 1982 Thursday February 1, 11:29 am Eastern Time Manufacturing Sector Sags Into Recession By Daniel Sternoff NEW YORK (Reuters) - U.S. manufacturing activity contracted for a sixth straight month in January, signaling that a sector accounting for one-fifth of the world's largest economy is in recession, a key industry report showed on Thursday. The National Association of Purchasing Management (NAPM) reported its manufacturing index fell in January to 41.2 -- its lowest level since March 1991 at the tail end of the last recession -- from 44.3 in December. Economists had expected a reading of 43.6. ``This has confirmed the feeling that the manufacturing sector is in recession. It confirms the impression that the manufacturing sector is in free-fall,'' said Anthony Karydakis, senior financial economist at Banc One Capital Markets in Chicago. Manufacturers have been struggling to cope with high energy costs, weakening export sales and sluggish consumer demand for big-ticket items as well as an overhang of inventories built up when the economy was booming in the first half of 2000. In an ominous sign for America's industrial sector in coming months, NAPM's new orders index, a gauge of production in the pipeline, tumbled to 37.8 -- its lowest since January 1991 -- from 42.5 in December. The NAPM production index tumbled to its lowest point since May 1982. SPILLOVER THREAT? The manufacturing sector's woes, which just months ago appeared contained, are now threatening to spill over into the broader economy, NAPM said. The report said that the index's slide below what it called the break-even point of 42.7 indicated that ``the overall economy failed to grow in January for the first time in 117 months.'' Federal Reserve Chairman Alan Greenspan, who slashed interest rates by an aggressive total of one full point in January, warned last week that a major inventory correction risked puncturing consumer confidence, a key determinant of consumer spending. Financial markets, still digesting the Fed's half-point rate cut on Wednesday, took the report in stride. The report lent strength to a rally in the U.S. Treasury market while major stock indices were mixed. The dollar traded little changed against major currencies. ``Obviously the economy is trouble -- the Fed has lowered rates dramatically -- but I wouldn't generalize from the state of the manufacturing sector that the overall economy is in the same dismal state,'' said Banc One's Karydakis. NAPM chair Norbert Ore said that the January index correlated with an economy shrinking at an annual pace of -0.6 percent. But he noted that the figure was within the survey's margin of error, suggesting that the economy may still be expanding, albeit at a snail's pace. ``The overall economy could still be growing but that would be a maximum of 0.6 of a percent, so that's still coming close to that no-growth scenario,'' Ore told a teleconference. He suggested that the sector's woes may be reaching a bottom, but admitted he had little evidence to that effect. ``We're at a bottom with no signs of dramatic improvement. There's a good chance for the manufacturing sector that we'll see three successive quarters of a no-growth scenario. Not four,'' Ore said. ``But I'm kind of stepping out on a limb a little bit. Right now there's nothing in the data that says there's an imminent turnaround,'' he said. The report said purchasing managers were concerned over slowing order rates, the need for inventory adjustments, production cutbacks and layoffs, bankruptcy filings in the steel industry and manufacturers' inability to raise prices. The NAPM prices paid component, an inflation gauge, rose to 65.7 from 62.2, while new export orders fell for the fourth straight month.