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Manufacturing Declines Again in December

The National Association of Purchasing Management reported that the manufacturing industry declined in November for the fifth consecutive month. The December PMI fell to 43.7%, below expectations, andis at its lowest level since the recession of 1991. However, December marked the overall economy's 116th consecuti

The National Association of Purchasing Management reported that the manufacturing industry declined in November for the fifth consecutive month. The December PMI fell to 43.7%, below expectations, andis at its lowest level since the recession of 1991. However, December marked the overall economy's 116th consecutive month of growth.

According to Norbert J. Ore, C.P.M., chair of the National Association of Purchasing Management's Manufacturing Business Survey Committee and vice president, purchasing and strategic alliances, Chesapeake Display and Packaging Company. "The manufacturing sector failed to grow in December for the fifth consecutive month. December’s PMI fell to within 1.3 percentage points of the breakeven line for the overall economy (42.4 percent). This is the lowest the PMI has been since April 1991 when it recorded 42.9 percent. New Orders continue to be a concern as that index has failed to grow since June and New Export Orders fell below 50 for the third consecutive month. Manufacturing activity has fallen sharply in the fourth quarter as the Production Index has been below 50 for three consecutive months."

The production indices all fell in December and all remain below the 50% mark. With both New Orders and Backlog of Orders contracting, there seems little hope of improvement in manufacturing activity over the next few months. NAPM's Production Index decreased 7.2% to 42.4 in December. The New Order Index fell 6.4% to 42.0 while the Backlog of Orders Index registered 36, indicating small backlogs for the eigth consecutive month. 

Among other sub-indexes, prices paid rose by 4.4% in December to 51.0 from November's 56.6, supplier deliveries registered 52.7% indicating faster deliveries in December, and employment decreased 3.2% to 42.8, down from 46.0 in November to its lowest level since December 1998..

Series December November
PMI 43.7 47.7
Production 42.4 49.6
New Orders 42.0 48.4
Backlog of Orders 36.0 42.0
Supplier Deliveries 52.7 49.2
Inventories 39.8 42.2
Employment 42.8 46.0
Prices Paid 61.0 56.6
New Export Orders 49.9 48.7
Imports 51.2 53.2

The next NAPM Report on Business will be released on February 1, 2001.

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