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Manufacturing Activity Slows

November 1, 2000

NEW YORK (AP) _ Manufacturing activity in the United States contracted for the third straight month, an industry group said Wednesday, yet another indication the U.S. economy is continuing to cool down.

The National Association of Purchasing Managers said its production index fell to 48.3 percent in October, slightly worse than the 49.9 percent level recorded in September. October’s figure also was below analysts’ forecast of 49.5 percent.

The NAPM index uses 50 percent as a break-even point, with anything above signaling economic growth and anything below indicating contraction. The index is closely watched because it is the first national reading for October on U.S. manufacturing performance, a key economic sector.

October marks the third straight month of contraction after 18 months of growth. Although the index had fallen at various points during that period as the rate of growth fluctuated, August was the first month since February 1999 that it had dropped below 50 percent.

Despite the manufacturing numbers, the NAPM said that the overall economy continued to grow in October for the 114th consecutive month.

``There are few signs of encouragement in this month’s report,″ said Norbert J. Ore, who oversees the monthly tabulation for the Tempe, Ariz.-based NAPM.

``Manufacturing is still feeling the effect of higher interest rates, higher energy prices, and the strong dollar,″ he added. ``Though prices still remain firm in most market, with the exception of some metals, the manufacturing sector in general appears to be losing momentum faster than the overall economy.″

The report attributed much of the slowdown to decreased production, a decline in new orders and rising prices.

Manufacturers got less new business in October as the new orders index fell to 48 percent after 20 straight months of growth.

Meanwhile, manufacturers are still paying high prices for their goods with the price index at 56.5 percent, which is slightly lower than it was September.

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