Purchasing Agents Note Slow Growth : Monthly Survey’s Economic Index Slips in December

Industrial growth slowed in December, but the economy still is expanding without signs of a resurgence of higher inflation, a business group said Sunday.

The National Assn. of Purchasing Management, made up of executives who buy supplies for industry, said its composite index declined to 51.1% in December from 53.3% in November. A reading above 50% indicates the economy is in an expanding phase, however, and December was the fourth month that the index was over the break-even point.

“Traditionally the industrial economy slows in December, so what we are seeing is not unusual,” Robert Bretz, chairman of the group’s business survey committee, said in announcing the results of the monthly survey of purchasing managers at 250 industrial companies. “However, the fourth quarter and the year were a pleasant surprise. The continued low level of price increases also indicates inflation is not on the horizon.”

The report is closely followed by economists looking for evidence on how American industry currently is performing and where it is headed.

Weak Employment Results

Employment showed the worst results in the December survey. A total of 95% of purchasing managers said their companies’ employment was the same as or lower than in the previous month. That was the highest level since November, 1982, when the total was 96%. Twenty-eight percent of the managers said their companies’ employment fell in December.

Prices remained stable. For the 13th consecutive month, the number of purchasing managers who reported lower prices--12%--exceeded those reporting higher prices--8%. “However,” the report said, “there are some signs that the pace of price decreases is slowing.”

New orders and production fell in December after a November improvement, but the association said seasonal factors could explain most of the declines.

The speed of vendor deliveries remained roughly unchanged, while inventories continued to decline.

December was the 11th month in which no shortages were reported.