Purchasing Group Reports Further Factory Decline

In the latest version of a closely watched report on factory-sector activity, the National Association of Purchasing Management said Thursday that manufacturing contracted in January for the sixth straight month.

The bad news for factory activity is also a blow to the outlook for trucking shipments in the foreseeable future, since until factory orders and production pick up they will continue to ship less and less freight to customers.

The NAPM index sank to 41.2, its lowest level since March 1991 when the economy was struggling to come out of recession. The December index reading had been 44.3, and NAPM says a reading below 50 indicates the sector is contracting.

NAPM Chairman Norbert Ore also warned Thursday that an index reading below 42.7 generally means that the broader economy is contracting as well as the factory sector. He said the latest NAPM number corresponds to a 0.6% decline in the overall gross domestic product, the Associated Press reported.

The Commerce Department reported this week that economic growth slowed to just a 1.4% annual pace in the fourth quarter, the slowest quarterly reading in more than five years.

Federal Reserve Chairman Alan Greenspan last week said growth is already probably around zero, and the Fed on Wednesday cut short-term interest rates another half-point to help get the economy moving again.