-------------------------------------------------------------------------------- By Lisa Singhania The Associated Press Originally published December 2, 2002, 10:44 AM EST
NEW YORK -- U.S. manufacturing activity contracted in November for third month, reflecting softness in new orders, a private industry group said Monday.
The Institute for Supply Management, based in Tempe, Ariz., said its index of business activity was 49.2 in November, a slight improvement from the 48.5 reading in October, but still below 50.
A reading above 50 signals the manufacturing sector is growing; a reading below 50 suggests the sector is contracting.
Analysts had forecast a reading of 51 for the month. The last time the index was above 50 was in August.
"The manufacturing sector failed to grow in November," said Norbert J. Ore, who oversees the monthly survey for the group, formerly known as the National Association of Purchasing Management. "The sector continues to need drivers that will help end the stagnation."
Many of the purchasing managers surveyed expressed concerns that their business was "flat" or "depressed."
There also was anxiety about the dock lockout on the West Coast, as well as the possibility of a war with Iraq.
Specifically, the survey showed a slight decline in new orders and a continuing contraction in employment among manufacturers. Production, however, showed more strength, particular in the furniture, tobacco, textiles, chemicals and food industries.
"The trend is well established that the overall economy is holding up, but the manufacturing sector is feeling the brunt of the downturn," Ore said. "The decline in manufacturing employment is quickening. We are seeing a slowing in the rate of price increases. Overall, there is not really any signs of potential change either upward or downward."
Still, the news did not discourage buyers on Wall Street, who sent the Dow Jones industrials briefly above 9,000 for the first time since summer. There were also gains on the Nasdaq composite and Standard and Poor's 500 indexes.
The ISM report is closely followed by economists because it offers an early reading on the health of the manufacturing sector. Its index is based on a survey of executives who buy the raw materials for manufacturing at more than 350 companies.
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