US economic outlook darkens
One the most closely watched barometers of US manufacturing activity, the monthly report by the National Association of Purchasing Management (NAPM), showed the decline in the sector continued during September - the 14th straight month in a row.
The Association’s index of business activity for September came in at 47 points – 2.9 points less than August’s reading. An index of below 50 indicates contraction in manufacturing and above 50 signifies growth. The index is based on a survey of purchasing executives who buy raw materials for manufacturing at more than 350 companies.
Nevertheless, the index was two points above the reading that had been expected, and the indices monitoring production and new orders held out above 50% for the second consecutive month after eight straight months of decline. Of the 20 industries tracked by the association, leather was among the eight that reported growth.
Shares were down following the report. The Dow Jones industrial average fell 79 points to 8,769 and the technology-heavy Nasdaq composite index fell 33 points to 1,466 in early trading.
In a separate report, the US Commerce Department said consumer spending was up for the second consecutive month during August to 0.2%, as lower tax rates and federal tax rebate cheques pushed up levels of disposable income. However, the rise was still short of analysts’ expectations and inevitably clouded by the New York and Washington terrorist attacks.
Prior to September 11, economists had been hoping that consumer spending, which accounts for two-thirds of the nation’s economic activity, would hold out and steer the economy away from recession. However, most believe now that it is not a case of if recession will bite, but when and how hard.
