CHICAGO (AP) - Manufacturing activity in the Chicago area contracted in November for the first time in three-and-a-half years, the National Association of Purchasing Management Chicago said Thursday.
The group said its index of area business activity fell to 49.9 in November on a seasonally adjusted basis, its lowest level since April 2003.
A reading below 50 indicates a contraction in the manufacturing sector, while a reading above 50 indicates expansion.
The November level, which compared with 53.5 registered in October, was well below Wall Street expectations and provides the latest evidence of weakness in the U.S. manufacturing sector.
The data could help boost expectations for the Federal Reserve to start cutting interest rates to help breathe life into the economy. The Federal Open Market Committee has opted to leave its benchmark federal funds rate at 5.25 percent at each of its last three meetings, after steadily raising rates for two years to combat inflationary pressure.
The Chicago index is based on a survey of purchasing managers in northern Illinois and northwestern Indiana. The Chicago survey is closely watched for clues to the monthly index of the Institute for Supply Management, which will be released Friday.
According to a statement by the organization, the index has fallen in eight of the past 11 months.