Manufacturing index drops to 28-year low

Manufacturing activity fell more than expected in December, hitting the lowest reading in 28 years as new orders and employment continue to decline. The Institute for Supply Management, a trade group of purchasing executives, said today its manufacturing index fell to 32.4 in December from 36.2 in November. Wall Street economists surveyed by Thomson Reuters had expected the reading to fall to 35.5. Component readings 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. Any reading for the overall index above 50 signals growth, while a reading below 50 indicates contraction. The index is based on based on a survey of the institute’s members, has fallen steadily for the last five months as the economy deteriorated. The index fell to its lowest level since June 1980, when the economy was near the end of a six-month recession.