Front Page || Main Index || Corpus Christi News || Business || Texas || Sports || Entertainment || Selena
Friday, Oct. 2, 1998
Manufacturing activity slows for 4th consecutive month
Economist: Slowdown signals need for further rate cuts
Associated Press
NEW YORK - Manufacturing activity declined in September for the fourth straight month as global economic turmoil hammered U.S. exports. But the slowdown was less severe than expected due to stronger production at General Motors.
The National Association of Purchasing Management reported Thursday that its monthly index of business activity was at 49.4 percent last month, unchanged from its August level. Any reading under 50 percent is a sign of contraction in the industrial sector.
Economists had predicted the index would reveal a sharper decline. But GM's continued recovery from devastating strikes in June and July helped offset the growing economic problems that are hindering American manufacturers.
``Major concerns continue to focus on Asia and its effect on the domestic economy - cheaper imports, reduced exports, and currency instability,'' said Norbert J. Ore, chairman of the NAPM's survey panel.
The private group's report is compiled from a survey of corporate purchasing executives nationwide. It is widely followed by economists because it is usually the first indicator of how the economy performed in the previous month.
Exports continued to contract in September, although at a slower pace, while imports grew at a faster clip. Prices decreased at a faster rate.
The manufacturing sector's suffering, combined with other recent signs of slowing economic growth, suggests the Federal Reserve will need to cut interest rates again, said Mark Vitner, an economist at First Union Capital Markets Group in Charlotte, N.C.
The Fed on Tuesday lowered a key short-term interest rate for the first time in more than 2 years, trying to defend the U.S. economy from economic ills that have spread from Asia to Russia and Latin America.
The manufacturing report ``goes right to the heart of what the Fed did this week,'' Vitner said. ``They're not as concerned about inflation because all the leading signs of inflation seem to be behaving very well. What they're concerned about is that the Asian flu is going to infect our economy.''
Despite the manufacturing slowdown, September marked the 89th consecutive month of U.S. economic growth, the purchasing group said.
The report came as the government said separately that construction spending rose a slim 0.1 percent in August as government outlays for residential building flattened and spending on commercial projects continued to slide.
Also Thursday, the Labor Department said weekly jobless claims fell to their lowest level since April, surprising analysts who expected unemployment to rise as Asia's economic problems spread to other parts of the world.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web