NEW YORK — Signs that the economy could turn even weaker in 2009 grew Friday, as an index of December manufacturing activity sank to its lowest point in 28 years. Every corner of the sector was down, including bakeries, cigarette makers and aluminum smelters.
The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index fell to 32.4 in December, a greater-than-expected decline from November's reading of 36.2. Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5.
Components of the index hit historic lows. New orders fell to their lowest level on records going back to 1948. Prices fell as the number of respondents saying they had paid more in December than in November sank to its lowest monthly reading since 1949.
A reading for the overall index above 50 signals growth; a reading below 50 indicates contraction. The index, based on a survey of the institute's members, has fallen steadily for the last five months as the economy has deteriorated.
December's reading is the lowest since June 1980, when the economy was near the end of a six-month recession.
If December's rate of manufacturing activity were to persist for 2009, the nation's gross domestic product would show a 2.7% contraction, said Norbert Ore, chairman of the group's business survey committee. Gross domestic product, the broadest measure of economic activity, decreased at an annual rate of 0.5% in the third quarter of 2008, according to the Bureau of Economic Analysis.
Only three recessions in the history of the index have showed weaker manufacturing readings, said John Ryding of RDQ Economics. Those recessions were in 1948 to 1949, 1973 to 1975 and 1980.
With European manufacturing indexes also dropping, "the case for a massive global fiscal stimulus continues to grow," Ryding said.
As the economy sputters through a recession that began in December 2007, no industry is proving resistant. No sector reported overall growth in December. Also, none reported growth in new orders, production, employment or prices.
Declining prices, coming after the summer's soaring market for commodities, have sent manufacturers -- especially in chemicals and metals -- reeling.
