Weakest link in economy: manufacturing

The Associated Press
Wednesday May 02, 2001


NEW YORK — U.S. manufacturing declined for the ninth straight month in April, according to a report Tuesday that shows the sector is the weakest link in the nation’s struggling economy. 

However, the decline was at a slightly slower rate than it was in March, and the overall economy grew modestly, the National Association of Purchasing Management said. 

“For the moment, manufacturing is deep in recession, but there is some slim, positive hope that as we get into the summer months that things will improve,” said Mark Zandi, chief economist with Economy.com in West Chester, Pa. 

Separately, the Commerce Department said construction spending posted a bigger-than-expected gain in March, the fifth monthly increase in a row. 

But there was more bad news from the auto industry: Ford said Tuesday that U.S. sales slid 16 percent in April, dragged down by weak sales of high-profit sport utility vehicles. General Motors and Chrysler were expected to announce similar news later in the day. 

The markets finished higher in trading Tuesday, with the Dow Jones industrial average up 163 points to 10,898 and the Nasdaq composite index up 52 points to 2,168. 

The manufacturing report is based on a survey of purchasing executives who buy raw materials at more than 350 industrial companies. 

The association’s index of business activity rose last month to 43.2 from 43.1 in March. An index above 50 signifies growth in manufacturing, while a figure below 50 shows contraction. An index above 42.7 generally points to growth in the overall economy. 

Norbert Ore, who oversees the monthly survey, said the major concerns among manufacturers are energy costs and softening demand. Of the 20 industries in the manufacturing sector, just three – food, chemicals and a miscellaneous category – reported growth. 

Also, the manufacturing employment index fell for the seventh consecutive month, showing that layoffs are taking effect on the nation’s assembly lines. 

However, new orders were up from March, and manufacturers were paying lower prices for materials.