U.S. Manufacturing Unexpectedly Contracts Again

ByJohn S. McClenahen In November, the manufacturing sector of the U.S. economy displayed virtually none of the cautious optimism that a few manufacturers are beginning to express about the overall economy in 2003. Indeed, even as the overall economy expanded for the 13th consecutive month in November, the manufacturing index compiled by the Tempe, Ariz.-based Institute for Supply Management (ISM) was at 49.2%, its third straight month below the 50% mark that separates manufacturing contraction from expansion. Although the PMI, as the index is formally known, last month was seven-tenths of a percentage point higher than in October, economists generally had expected it to edge above 50%. "The [manufacturing] sector continues to need drivers that will help end the stagnation," says Norbert J. Ore, group director for strategic sourcing and procurement at Georgia-Pacific Corp. and the chairperson of ISM's manufacturing business survey committee. "The dock strike on the West Coast was still on the minds of many [purchasing and supply executives] as they apparently were taking other measures such as using airfreight or shipping through East Coast ports," says ISM. "The situation with Iraq is another major concern as [people] felt the uncertainty is a deterrent to business."