Quality Magazine

Manufacturing Index Hits 28-Year Low

January 6, 2009

TEMPE, AZ-Economic activity in the manufacturing sector failed to grow in December for the fifth consecutive month, and the overall economy contracted for the third consecutive month, according to the Institute for Supply Management (ISM).

“New orders have contracted for 13 consecutive months and are at the lowest level on record going back to January 1948,” says Norbert J. Ore, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee. “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."

Manufacturing contracted in December as the PMI registered 32.4%, 3.8 percentage points lower than the 36.2% reported in November. This is the lowest reading since June 1980 when the PMI registered 30.3%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

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