U.S. manufacturing output suffered its worst drop since December 1974, falling 2.8% in September, according to the most recent Federal Reserve report on industrial production and capacity utilization.
The drop was due to a combination of factors, from the ongoing strike at Boeing to a slowing global economy impacting U.S. trade partners, to lingering effects of hurricanes Gustav and Ike.
The Federal Reserve in Philadelphia reported its benchmark index of manufacturing fell to -37.5% from +3.8%, illustrating how quickly the trouble has spread.
The Institute for Supply Management said its regular survey of U.S. manufacturers put its Index at 43.5%, plummeting from 49.9 in August. Anything below 50 generally indicates contraction. Spokesman Norbert Ore said: "This is the lowest level for the PMI since October 2001," when the first post-9/11 effects were being felt and the index reached 40.8. ISM's New Orders Index was 38.8% in September, 9.5 points lower than August's 48.3%. Reflecting similarly dim results, ISM's Production Index collapsed to 40.8% in September, falling 11.3 points from August's 52.1.
A similar Eurozone report from Markit Economics puts the purchasing managers' index for September at 45, from 53.2 in 2007. Again, any number below 50 indicates contraction.
The UK reported a similar PMI index at 41, the lowest on record, down from 45.3 in August.
In Japan, the same type of survey is the respected Bank of Japan Tankan survey, and which reversed to negative in September for the first time since mid-2003.
So far, the only major economy still humming along is in China, where September was actually up significantly from August. The overly large month-to-month gains are an anomaly, however, reflecting the fact that China had forced many factories around Beijing to shut down to control pollution during the Olympics.
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