Purchasing Managers Index Dips in December on Asia Woes

A closely watched gauge of U.S. manufacturing cooled in December as the economic crisis in Asia and railroad snarls hurt orders and production.

The National Association of Purchasing Management's index fell to 52.5 last month-the lowest reading since January 1997-from 54.4 in November.

Analysts had expected a December reading of 54.0. An index reading of 50 or more means manufacturing is expanding, while a reading below 50 signals a contraction.

As 1997 ended, manufacturers were wary about the economic outlook for the new year and concerned about "weakening in new orders, the strength in the dollar, Asian demand, and railroad delays," said Norbert Ore, chairman of the association's survey committee and an executive at Sonoco Products Co., a packaging producer.

The crisis in Asia was of particular concern because the continent accounts for about one-third of all U.S. exports.

"Growth will be reduced by about one-half percent due to slower export growth to Asia," said Kathleen Camilli, an economist at investment firm Tucker Anthony in New York. "But quite frankly this could change quickly should Asian economic weakness become more pervasive."

The purchasing managers index is based on nationwide responses from executives at more than 300 companies, in 20 industries ranging from transportation equipment, primary metals, and electronics to petroleum, paper, food, and textiles.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER