More Bad News For Manufacturing

Manufacturing activity declined for the 10th month in a row in May, suggesting the U.S. economy continues to struggle, an industry group reported Friday.

The National Association of Purchasing Management said its purchasing index fell in May to 42.1, a decrease from the 43.2 it reported in April. The reading was lower than the 43.5 analysts had anticipated.

An index above 50 signifies growth in manufacturing, while a figure below 50 shows contraction.

"The manufacturing sector continued to decelerate, and at a faster rate, in May," said Norbert J. Ore, who oversees the monthly index of business activity for the Tempe, Arizona-based association.

Ore said purchasing managers were concerned about the economy, the impact of soaring energy prices and a lackluster quarter in the automobile sector. While NAPM does see some indication that pricing pressures are alleviating, Ore said there is "no evidence of recovery in this month's report."

The NAPM report is closely watched because it is one of the first indications of whether the manufacturing sector grew or cooled off in May. The figures are based on a survey of purchasing executives who buy the raw materials for manufacturing at more than 350 industrial companies.

Of the 20 industries in the manufacturing sector, just three - food, industrial and commercial equipment and computers and wood and wood products - reported growth.

"Manufacturing is in a full-blown, outright, unmitigated recession," said Mark Zandi, chief economist at Economy.com in West Chester, Pennsylvania. "It's far and away the weakest part of the economy and any hope that it would recover soon are dashed by these numbers."

In a separate report, the Labor Department said Friday the nation's unemployment rate dipped modestly to 4.4 percent in May, the first improvement in eight months. The overall jobless rate had reached 4.5 percent in April, the highest level in 2 1/2 years.

Manufacturing suffered heavy layoffs last month, losing an additional 124,000 jobs. Since July, manufacturers have laid off 675,000 workers as they struggled to cope with shrinking demand and a rising backlog of unsold goods.

Stocks were mixed following the release of the reports, with the Dow Jones industrial average off 30 points to 10,881 and the Nasdaq composite index up 11 points to 2,122.

©MMI The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed