Manufacturing Indicator Shows Activity Crawled Ahead In August

By Agence France-Presse The U.S. manufacturing outlook darkened and job-cutting announcements shot up in August, fresh data showed Sept. 3. Analysts' hopes for a recovery in U.S. industry were dashed by a survey showing manufacturing activity crawled ahead in August but that new orders declined. The Institute for Supply Management (ISM) purchasing managers' index -- based on a survey of supply executives -- was at 50.5 points in August, unchanged from July. Any figure above 50 points indicates growth. "Manufacturing activity improved slightly during August," says the survey committee chairman, Norbert Ore. "Putting the year in perspective, we now have seven consecutive months of modest growth." But a breakdown of the figures also shows the ISM's new orders index declined from 50.4 points in July to 49.7 points in August. "New orders softened and are a cause for concern as we look at the balance of the year," Ore says. "At the current level of growth in the overall economy, many manufacturers find themselves anxious about second-half sales." The labor market also was fragile. Job cut announcements surged to 118,067 in August from 80,966 in July, says a survey by Challenger, Gray and Christmas, an international outplacement firm. It was the third highest figure this year. The manufacturing figures dashed hopes for a recovery from the July slump, said Naroff Economic Advisors President Joel Naroff, based in Holland, Pa. "While the economy is still growing, there is no question about it, the growth pace is nothing sterling," Naroff says. "While production is still strong, orders are not," Naroff says. "It tells me that the strong production levels we're seeing are at risk. That is clearly a worry." Other key figures in the ISM index showed:

The production index declined 0.1 point to 55.6, showing slower growth.

The employment index climbed 0.8 point to 45.8, showing a slightly slower contraction.

The new export order index advanced 0.5 point to 52.7, indicating faster growth. The imports index eased from 54.2 points in July to 51.9 points in August. Copyright Agence France-Presse, 2002