The Institute for Supply Management’s factory index, released today showed that manufacturing in the U.S. contracted at the fastest pace in 26 years.
Bloomberg: Manufacturing in the U.S. contracted in October at the fastest pace in 26 years as it got tougher to obtain credit and faltering economies abroad eroded prospects for American exports.
The Institute for Supply Management’s factory index fell to 38.9 from 43.5 in September; 50 is the dividing line between expansion and contraction. The Commerce Department said separately that construction spending fell for the eighth time in 10 months in September.
Today’s report may add to pressure for further interest-rate cuts and an additional federal package of tax and spending measures. The figures also showed the weakest level for U.S. export orders in the two decades the ISM has kept the data, a sign of slowdowns in Europe and Asia.
“Manufacturing is definitely in a deep recession right now,” John Lonski, chief economist at the Moody’s Capital Markets Group in New York, said in an interview with Bloomberg Television. “We’re definitely going to have more rate cuts” and possibly “more in terms of fiscal stimulus.”
But, as is becoming typical, the report didn’t affect the stock market.
Stocks remained higher after the report as a decline in money-market rates overshadowed concerns about a weakening economy. The Standard & Poor’s 500 index rose 0.3 per cent to 971.57 at 10:15 a.m. in New York…
Today’s report also noted that job losses increased.
Job losses accelerated, today’s report also showed. The employment index decreased to 34.6 from 41.8 in September. Employers have cut more than three-quarters of a million jobs so far this year, and economists predict the labour Department in four days will report that the unemployment rate climbed to 6.3 per cent in October, matching the highest level since 1994.
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