Manufacturing Contracts in November at Fast Pace

Tempe, AZ, Dec. 1, 2008 -- Manufacturing output in the U.S. contracted in November at the fastest pace in 26 years, according to the Institute for Supply Management.

The group's factory index dropped to 36.2, the lowest level since 1982. A reading of 50 is the dividing line between expansion and contraction.

The financial crisis has spiraled into a global economic downturn that’s hurt sales here and abroad, forcing manufacturers to pare production.

The ISM index was projected to drop to 37, according to 61 economists.

ISM’s purchasing managers’ gauge of new orders for factories decreased to 27.9, lowest since 1980, from 32.2 the prior month. The production measure fell to 31.5 from 34.1.

The index of prices paid dropped to 25.5, the lowest level in six decades, from 37.

The employment index decreased to 34.2 from 34.6 in October. The economy has lost 1.2 million jobs so far this year.

The U.S. economy shrank at a 0.5 percent pace in the third quarter, with business spending on equipment and software declining at a 5.7 percent rate, the biggest drop since the first quarter of 2002.

Manufacturers may have cut 80,000 jobs in November, after a loss of 90,000 the month before, according to the median forecast ahead of the Labor Department’s jobs report due Dec. 5. Companies have axed approximately 1.2 million jobs so far this year.