US manufacturing slumps further

Manufacturing experiences the worst year since the '90s

US manufacturing activity fell once again in July, adding up to a full year of declines and signalling the worst year for the factory sector since the recession in the early 1990s.

The National Association of Purchasing Management said its monthly manufacturing index fell to 43.6 in July from 44.7 in June.

The manufacturing sector... appears to continue to lack drivers that will stimulate recovery

Norbert Ore
NAPM

A reading under 50 signals manufacturing activity is contracting. The index has remained below that benchmark since August 2000.

The fall was steeper than economists had expected. Most had been anticipating that the index would remain almost level with June's figure.

"The manufacturing sector... appears to continue to lack drivers that will stimulate recovery," said Norbert Ore of NAPM.

The NAPM new orders index, which indicates demand for factory goods in the pipeline, slipped to 46.3 from 48.6 in June.

One positive sign was that firms are clearing their backlog of stock at a quicker pace. The NAPM inventories index fell to 35.8 from 40.8 in June.

Growth slows

Overall economic growth in the US fell to its lowest rate for eight years during the second quarter of 2001.

Gross domestic product (GDP) was up a mere 0.7%, according to figures released last week.

Government figures issued on Tuesday gave a more positive picture, showing US consumer spending continued to rise - up 0.4% in June.

Consumer spending accounts for at least two-thirds of the US economy.

But other figures released on Tuesday showed consumer confidence, which had edged up in June, slipped in July, following a stream of corporate lay-offs.

Jobless figures are due out on Friday, with many economists predicting that the July jobless rate will climb to 4.7%, from 4.5% in June, and that another 38,000 jobs will be cut.