Buyers Say Signs Point to a Slowdown : Managers Expect Slump in Industrial Output to Worsen

Production last month was the weakest since the recession ended in December, 1982, and other indicators point to further deterioration in coming months, the National Assn. of Purchasing Management said Sunday.

The industry association said the rate of new orders and the level of employment both hit their lowest levels since December, 1982.

Only prices showed improvement over the month, the association said. Its monthly survey found that more members reported declining prices than reported price increases, it said.

Robert J. Bretz, chairman of the association’s business survey committee, said the further slowing of the economy in December resumed several months of decline that had been interrupted by a pause in November.

Bretz, also director of corporate purchasing for Pitney Bowes Inc., said the economy “shows no immediate signs of improving.”

Composite Edges Down

The association said its composite index for the economy inched down to 51.3% during December from 52.1% in November. A reading below 50% indicates that the economy is contracting; a reading above that level indicates growth.

“This index has languished close to the 50% level for five consecutive months,” the association said.

The index relates seasonally adjusted monthly results of new orders, production, employment, vendor performance and inventories. The figures are based on U.S. Commerce Department analysis, the association said.

The association reported that 22% of its responding members said production was lower in December than the month before, the most since 33% reported declines in December, 1982. Only 17% reported an improvement in production.

Twenty-four percent of the companies reported a decline in new orders, against 19% reporting an increase--the widest negative disparity since an 18-point difference as the recession was ending in December, 1982.

“The negative level of this leading indicator offers little hope for immediate improvement in the economy,” said the association, which called new orders “the driving force behind production.”

The association said only 6% of its members reported hiring more people last month, the lowest level since the 6% of December, 1982, contrasted with 13% that reported employment gains in November. Twenty-three percent reported declines in the number of employees in December, with frequent reports of plant and production line shutdowns and layoffs, it said.

Meanwhile, 12% said their companies had increased prices, but 13% reported cuts--the first time since March, 1983, that more members reported price declines than rises.

The association said prices were lower for fuel oil, gasoline and petroleum products, polyethylene, polyvinyl acetate, polyvinyl alcohol, copper and wood pulp.