Analysts Expect Another Weak Manufacturing Report

Washington, DC, Dec. 29, 2008-- With low demand and the ongoing recession, analysts are looking for December data on manufacturing to remain near its lowest level in 26 years.

For November, the Institute for Supply Management reported that its manufacturing index came in at 36.2% -- the lowest level since 1982 and the fourth consecutive month of contractions -- as a gauge of price pressures hit an all-time low. On Friday, ISM will report the data for December, and analysts polled by MarketWatch are expecting a result of 36%.

At IHS Global Insight, analysts are looking for an even further decline, with a December reading of 34%, on production cuts and a higher frequency of layoffs.

"Manufacturers are taking aggressive action to reduce production in line with weak demand, and on top of this do no want to be caught with unwanted inventories," according to a recent Global Insight research note.

"Inventories not only eat up precious cash, but also face significant valuation risk as many product prices remain under downward pressure."

Readings above 50% indicate an expansion of the manufacturing economy, while readings below indicate a contraction. The recent low readings signal ongoing recessionary conditions, according to analysts.

On Tuesday the Conference Board will report its reading on consumer confidence, and analysts are looking for a result of 46, compared with 44.9 in November.

Still, with job worries rampant, even a higher result for December will result in a level that remains too close for comfort to the record low that was reached in October.

"Concerns about a deepening global recession, rising unemployment and falling asset prices are dampening spirits and limiting spending," according to Global Insight. "As a result, we expect that real consumer spending will remain on a downward path into 2009, until a new round of tax cuts provides a boost to disposable income."