U.S. Economy: Manufacturing Shrinks Most in 26 Years

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U.S. Economy: Manufacturing Shrinks Most in 26 Years

By Timothy R. Homan

Dec. 1 (Bloomberg) -- American manufacturing contracted in November at the steepest rate in 26 years, leading Europe and Asia into an industrial slump as a recession that began in the U.S. in December 2007 spread around the globe.

The Institute for Supply Management’s factory index dropped to 36.2, below economists’ forecasts, and its gauge of raw- material costs plunged to the least in six decades, intensifying concern over deflation. The Tempe, Arizona-based group’s report came as factory indexes in China, the U.K., euro area, and Russia all fell to record lows.

The U.S. entered a recession a year ago this month, according to a declaration today by the National Bureau of Economic Research panel that dates American business cycles. The economic slowdown and decline in inflation are putting pressure on policy makers to keep lowering interest rates and boost stimulus plans.

“This downturn in the global economy is probably more synchronized than we have ever seen,” said Jonathan Basile, an economist at Credit Suisse Holdings in New York. Policy makers should “open the flood gates” for more action, he said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aCHkGn9RcFc4&refer=home