A measure of U.S. manufacturing activity fell to a 26-year low in November as new orders dropped for the 12th consecutive month, a trade group said Monday.
The Institute for Supply Management’s index of manufacturing activity fell to 36.2 from October’s 38.9. A figure below 50 indicates the sector is contracting.
The November reading is the lowest since May 1982, the group said, when the economy was in a painful recession.
The report “indicates a continuing rapid rate of contraction in manufacturing,” said Norbert Ore, chairman of the institute’s survey committee.
The survey’s new orders index fell to 27.9 from 32.2, the report said, its lowest level since June 1980. The production index fell to 31.5 from 34.6.
Manufacturing employers continue to cut jobs, the survey found. The employment index fell to 34.2 from 34.6, its fourth straight drop.
The report came as factory indexes in China, the UK, euro area and Russia fell to record lows. The economic slowdown and decline in inflation are putting pressure on policymakers to keep lowering interest rates and boost stimulus plans.
“This downturn in the global economy is probably more synchronized than we have ever seen,” said Jonathan Basile, an economist at Credit Suisse Holdings in New York. Policymakers should “open the flood gates” for more action, he said.
Separately, construction spending fell by a larger-than-expected amount in October, another indication that problems facing the builders of homes, hotels and other projects are deepening and likely to persist.
The Commerce Department reported Monday that construction spending dropped by 1.2 percent in October, bigger than the 0.9 percent average decline economists expected.
Construction of single-family homes plunged 4.6 percent from September, pulling overall housing construction down by 3.5 percent following a 0.5 percent drop in September, according to the report.
Private residential building activity, which totaled $338.8 billion at a seasonally adjusted annual rate in October, has had increases in only two months over the past 31.
“There’s hardly anything encouraging to find in the report,” said David Seiders, economist at the National Association of Home Builders, who expects construction to keep falling until at least summer 2009.
