The manufacturing economy declined in September to its lowest level since the nation's current economic expansion began in December 1982, the National Association of Purchasing Management reported Monday.
The Purchasing Managers' Index fell to 44.4 percent, down from 47.0 percent in August.A reading below 50 generally indicates the manufacturing segment of the economy is declining in growth. A reading above 50 usually indicates that the manufacturing portion of the economy is expanding.
"The manufacturing economy ended the third quarter on a sour note," said Robert J. Bretz, chairman of the association's business survey committee.
The outlook is equally as gloomy as the September survey of some 300 purchasing executives, Bretz said.
If the Purchasing Managers' Index remained unchanged at the September level for the remainder of the year, it would be consistent with real GNP growth of about 1 percent for 1990, he said.
The index would have to fall below 44 percent before indicating a decline in real GNP - a point suddenly drawing very near, Bretz said.
The September survey, the group's Production Index fell to its lowest level, at 45.1 percent from 48.5 percent in August, since the nation began an economic recovery from recession in December 1982.
The New Order Index hit its lowest point - 44.5 percent from 46.4 percent a month earlier - since the trough of the previous recession in November 1982.
"The sharp decline in new orders in July and August has led to a marked decline in production," said Bretz.
A weakness in new orders signals no relief in the near future, he added.
"Coupled with sharply rising prices for petroleum-related products spawned by the Middle East crisis, the immediate outlook appears to be the worst of all combinations, a declining economy with rising inflation," said Bretz.
Supplier deliveries were faster in September, reflecting the declining economy. The Supplier Deliveries Index dropped to 49.4 percent, down from 51.1 percent in August, the survey showed.
Inventories decreased for for the 22nd consecutive month in September and at a greater rate than in August. The Inventories Index fell to 40.8 percent from 44.1 percent in August.
The Employment Index fell in September for the 19th consecutive month - to 41.5 percent from 44.1 percent a month earlier - and September's rate of decline was the greatest in five years.
The survey showed the Price Index took its largest one-month jump in 15 years to 73.4 percent up from 58.2 percent in August as a result of the crisis in the Middle East.
Purchasers expressed concern suppliers will raise prices even further in light of uncertainties surrounding the current Persian Gulf crisis.
But most, 88 percent, said they were not, because of the Middle East crisis, changing their capital spending plans for the next six to 12 months.
The New Export Orders Index rose in September to 54 percent, up from 53 percent in August, for the 33rd consecutive monthly increase.
The Imports Index, however, declined for the fifth consecutive month to 45.5 percent from 47.5 percent in August. The September reading was the lowest since December 1989.