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Manufacture index continues long slide

TEMPE, AZ -The National Association of Purchasing Managers' index of manufacturing activity declined for the fourth straight month in November. The index logged in at 47.7 percent, down 60 basis points from the 48.3 percent recorded for October.

Actually, NAPM's manufacturing indicator has been on a consistent slide since February, when it hit 56.9 percent. The only month since then in which the index didn't fall off from the previous month was July, when it posted the same 51.8 percent that it recorded for June.

Norbert Ore, chairman of NAPM's manufacturing business survey committee, said of November's percentage, "The trend of contraction in manufacturing was accentuated by the fall of November's production index to below the 50 mark for the second consecutive month.

"New orders continue to be a concern, as that index has failed to grow since June," he went on. "New export orders fell below 50 for the second straight month, enhancing concerns about a global slowdown."

Among the index's other components, the backlog of orders index declined for the second consecutive month. Manufacturing employment also declined, below NAPM's break-even level of 50 percent, for the second straight month.

In addition, the purchasing managers surveyed by NAPM told the organization that they are concerned about the near term going forward. The purchasing managers cited rising energy costs and interest rates, and unexciting levels of retail sales.

Among the rising components to the November index, the price index remained positive as the purchasing managers reported price increases for the 19th consecutive month.

The inventories index finished November at 42.2 percent, which, according to NAPM, indicates that manufacturers are liquidating inventories at a faster pace than in October. Yet more purchasing managers (17 percent in the survey, compared with 14 percent in October) also felt that their customers' inventory levels were still too high; plus, fewer managers (69 percent, down from 73 percent in October) thought that customers' inventories were at the right level.

"If there is a bright spot in this month's report," said Ore, "it is that the rate of decline in production decelerated, indicating only a small decline in production compared with October."

Beginning with this week's issue, Home Textiles Today will cover the National Association of Purchasing Management's monthly purchasing managers' index. This indicator tracks manufacturing activity by surveying purchasing managers as to the shape of their business, broken down by production, orders, inventories, exports, imports and a number of other factors.

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