Manufacturing looks grim

WASHINGTON --- A gauge of U.S. manufacturing activity that fell to a 26-year low Monday followed similarly weak readings in Europe and China, fueling fears of a deepening global downturn.

The Institute for Supply Management's index of manufacturing activity for November fell to 36.2 from October's 38.9. The reading was worse than Wall Street economists' expectations of 38.4, according to a survey by Thomson Reuters. A figure below 50 indicates the sector is contracting.

The November reading is the lowest since May 1982, the Tempe, Ariz.-based institute said. The report is based on a survey of corporate purchasing managers.

The survey "points to one of the deepest contractions in industrial output in the post-World War II era," wrote Michael Feroli, a U.S. economist at JPMorgan Chase & Co. Inc., in a research note.

Exports, a key source of strength for manufacturers in the past, are no longer a bright spot as major global economies slow down.

The institute's index of new export orders remained at 41, the same as in October and the lowest reading since 1988. It's down from 57 as recently as August.

"Rapid export growth was a crucial support to the economy for most of this year," said Nigel Gault, the chief U.S. economist for IHS Global Insight. "That key prop is now being knocked away as a global recession takes hold."

Surveys from the United Kingdom, the European Union, China and other countries also were weak, economists said.

Mr. Feroli said a global manufacturing index compiled by JPMorgan Chase, fell to 36.4 for November, its lowest point since 1998. The global index consists of aggregated data from about 30 countries, he said.

Jay Bryson, a global economist for Wachovia Corp., said increases in net U.S. exports added about 1.4 percentage points to the economy's growth rate in 2008. But that figure is expected to slip next year to 0.5 percentage points, he said. Exports account for up to one-third of U.S. manufacturers' sales, he noted.