U.S. Economy: Manufacturing Shrinks Most in Almost Five Years

[swag]

Source: Bloomberg

Jan. 2 (Bloomberg) -- Manufacturing in the U.S. shrank the most last month in almost five years, triggering speculation that the Federal Reserve will cut interest rates by half a percentage point to stave off a recession.

The Institute for Supply Management's factory index fell to 47.7, from 50.8 the prior month, the Tempe, Arizona-based group said today. The figure was lower than forecast by any economist surveyed by Bloomberg News. Fifty is the dividing line between contraction and expansion.

Stocks fell and Treasury notes climbed as the report suggested the housing-market rout is spreading to the broader economy. The ISM's gauge has now fallen six straight months, the longest losing streak since the eve of the economy's last contraction in 2001.

``Right now we're not expecting a recession, but after this report we may have to revisit that forecast,'' said Kenneth Kim, an economist at Stone & McCarthy Research Associates in Skillman, New Jersey, which had the closest estimate in the Bloomberg survey. ``There's probably more pain and contraction to come'' in manufacturing, he said.



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=anLEam9Tw4Ik&refer=home

[Zynx]

1. The ISM index is a pretty damn good indicator.

I would say this spells a lot of trouble. You can't have retail, banking, and real estate in recession and expect the economy to be healthy.

[swag]

2. It's pretty crappy news, all right.

The stock market is taking a little bath, traders are rushing back into treasuries, and the dollar's sinking back nearer to its lows.

[Javaman]

3. wow, really? color me surprised...

do I really need to put the sarcasm smiling in at this point?

[area51]

4. Stave off a recession?

How can you stave off what's already here, and has been here since 2001?

[fascisthunter]

5. You Mean Those MSM Pundits were Full-Of-It

and the Left was right again?! No way!

[swag]

6. Nouriel Roubini sums up the gloomy feeling

http://www.rgemonitor.com/blog/roubini/234957

Nouriel Roubini | Jan 02, 2008
As expected - and argued in this space for a while - a US recession is now unavoidable: the year started with (trhese being the top Bloomberg news headlines today:

- the manufacturing ISM for December plunging to 47.7 (with a reading below 50 signaling an outright contraction of the manufacturing sector);

- retail sales being lousy in the holiday period (they fell 0.7% in December relative to November according to Redbook Research and they fell 0.2% relative to the week before in the week ending on December 29th according to the ICSC/UBS securities weekly index); and they fallen in real terms in this holiday period relative to a year ago;

- growth of internet sales being mediocre;

- LBO deals being dropped (the PHH- Blackstone deal) as financing shrinks.

- oil surging to $98 a barrel;

- National City slashing payout and jobs;

- the outlook for 2008 Detroit car makers and overall auto sales being awful.

. . .

The combination of the worst housing recession ever getting worse, a severe liquidity and credit crunch being worse now than in August, oil close to $100, capex spending by the corporate sector falling for four months nows, commercial real estate being in serious trouble, the labor market beginning its slack (as initial claims and continuing claims are surging), and a shopped-out, saving-less and debt-burdened consumer having stopped its shopping spree this holiday season will all lead to a severe - rather than mild - recession in 2008.

[Judi Lynn]

7. Manufacturing stumbles to nearly 5-year low

Source: Associated Press

Manufacturing stumbles to nearly 5-year low
Thursday, January 3, 2008
By VINNEE TONG
ASSOCIATED PRESS

NEW YORK -- The U.S. manufacturing economy unexpectedly contracted in December, ending a streak of 10 consecutive months of growth and sinking to its lowest point in almost five years, a private research group said Wednesday. The decline suggests that the overall economy may be weakening faster than some economists predicted.

The figures are closely watched because a slowdown in factory production can translate to job cuts, which in turn reduces consumer spending -- a major component of the economy.

The Institute for Supply Management, a private research group based in Tempe, Ariz., said its manufacturing index registered 47.7 last month, down 3.1 percentage points from the 50.8 recorded in November. A reading above 50 indicates growth; below that level indicates contraction.

The December results were weaker than the 50.9 expected by analysts polled by Thomson/IFR Markets. Last month was the first that manufacturing has failed to grow since January 2007, when the index was 49.3. It has been four years and eight months since the index was lower than December's level; it hit 46.4 in April 2003.



Read more: http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXk3NDImZmdiZWw3Zjd2cWVlRUV5eTcyNDA4MzkmeXJpcnk3ZjcxN2Y3dnFlZUVFeXky

[Rebellious Republican]

8. I see Bushco is formulating their excuse for the poor economy....

Its not corporate greed after all, has nothing to do with low stagnated wages, loss of jobs to outsourcing, HB1 visa's, low cost illegal immigrant labor, American corporations moving their factories overseas. Which translates into no money for the majority of americans to spend on those manufactured goods. Better get the hip waders out cause the shit is going to start getting deep!
:puke:

[Thor_MN]

9. We still manufacture something?

Or is this a measurement on production of Big Macs and Whoppers?

[Rebellious Republican]

10. Yes, we doo doo,

Apparently we still manufacture Bullshit and lots of it!

:toast:

[SpiralHawk]

11. "Don't worry. I'm in charge. I'm the decider." - Commander AWOL

"You can depend on me and my republicon homelander cronies to do a 'heckuva job' in response to this economic predicklement. I guarantee you, me and my republicon cronies will find a way to profit. Smirk. But, you know, too bad and stuff about you proles. Smirk."

- Commander AWOL Bush

[burf]

12. I can already hear the

Pubbie response: All you do is look at the negative. You gotta look at the bright side. American goods are now cheaper on the global market because of the value of the dollar. (Though we don't manufacture a heck of a lot in this country, and the price of commodities is putting the cost of food out of reach) This is because of Great Leader's strong economic policies. The economy is doing great. Hey, pay no attention to all this alarmist talk. American Idol starts this month, and whaddabout Paris and Britney and Blah, Blah, Blah........

[Doctor_J]

13. 10 months of growth and yet it's still at a 5-year low?

:wtf:

[Supersedeas]

14. nothing to see here -- feed them more Paris Hilton/Federline diversions

[saigon68]

15. Brittany's 16 year old sister's "Baby Daddy"

Drivel