The national figure of 52.0 might suggest there's room for the Federal Reserve to consider another rate cut later this month. Concerned about turbulence in credit markets and a plummeting housing market, the Federal Reserve on Sept. 18 cut key interest rates for the first time in four years, starting with an aggressive half-point move.

Investors have since been monitoring economic indicators such as the ISM's manufacturing report for clues whether the Fed will cut rates further when it meets Oct. 30-31.

Thomas J. Duesterberg, president and chief executive officer of the Manufacturers Alliance/MAPI, which is based in Arlington, Va., said that the positives in the manufacturing sector so far outweigh the negatives.

"Within manufacturing, the positives are aerospace, exports of things like electrical equipment and machinery, chemicals in general and for export," he said. "On the negative side, autos are sluggish domestically, construction materials for the residential market are pretty weak, things like appliances and furniture are somewhat weak."

Still, he expects that the Fed will cut rates an additional quarter of a point later this month, if only to prevent weakness in housing from damaging the broader economy.

"I think what they're thinking these days is that the U.S. economy is fragile ... and that it wouldn't take much to throw us into recession," he said.

Gary R. Thayer, chief economist with A.G. Edwards & Sons Inc. in St. Louis, also predicts that the Fed will lower rates further.

"I think the Fed is trying to be pre-emptive here and prevent the problems in housing from spreading," he said, adding, "I still think they have more work to do."

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