U.S., global manufacturing in tailspin

U.S. manufacturing output in December dropped to its lowest level since 1980 in the face of weak economic demand, according to the Institute for Supply Management.

   Production levels were 3.8 percentage points lower than in November as the group's manufacturing index registered 32.4 percent.

   A reading below 50 percent indicates the manufacturing economy is contracting and sustained readings below 41 percent point to contraction in the overall economy.

   In January 2008 the index was at 50.7 percent and began to drop precipitously in September, as the financial crisis broke open.

   ISM reported new manufacturing orders were down 5.2 percent month-over-month, the lowest reading since the index was created in 1948. Manufacturers inventories also declined 0.3 percent from November to December.

   Global manufacturing also hit record lows for output, new orders and employment, according to a similar survey of global purchasing managers by JPMorgan. The 11-year-old global index posted a score of 31.3 percent.

   The second half of 2008 has been dreadful for global manufacturing and the sector enters the new year mired in its deepest recession for decades. Manufacturing will therefore continue to weigh on world GDP figures, said David Hensley, director of global economics coordination at JP Morgan, in a news release.

   Lower output translates into less business for transportation companies that move goods and points to continued declines in international trade.

Source: American Shipper