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Tuesday, 1 May, 2001, 15:14 GMT 16:14 UK
US manufacturing remains weak
US factory silhouette
Could the downturn in US manufacturing be easing?
A key monthly report on the state of the US manufacturing sector has shown that it weakened for the ninth month in succession in April.

But there was some comfort in the fact that the National Association of Purchasing Management's monthly index had stabilised since posting its steepest decline in January.

The organisation said its monthly index of manufacturing activity (PMI) rose to 43.2 in April from 43.1 in March.

However, the figure was still below that predicted by analysts, and indicates that economic growth in the second quarter of the year could be weak.

A figure above 50 shows growth in manufacturing activity, while a figure below 50 signifies contraction.

"The manufacturing sector continued to contract in April," the report said.

"As the sector is struggling to gain a foothold that will reverse the decline, it is encouraging that pricing pressures appear to be moderating."

Interest rate cuts

This latest report could cloud hopes for more aggressive interest rate cuts from the US central bank, the Federal Reserve.

The manufacturing sector, which comprises one-fifth of overall US economic activity, has suffered sharply from the current slowdown.

In April, the US central bank, the Federal Reserve, cut interest rates for a fourth time this year to 4.5% in a bid to stimulate the nation's flagging economy.

Last week it emerged that the US economy grew faster than expected in the first three months of 2001, at a rate of 2% annually, compared to growth of only 1% in the last three months of 2000.

Analysts are anxious to discover whether this indicates that a recovery is already underway, or whether the US slowdown will be prolonged - which would have a knock-on effect on other economies around the world.

The NAPM report is closely watched because it is one of the first indications of economic activity in April.

The sharp decline in the NAPM index in December gave an early indication of the slowdown, and was one of the factors that led the Fed to make its first rate cut in early January.

The figures are based on a survey of purchasing executives who buy the raw materials for manufacturing at more than 350 industrial companies.

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