Purchasers’ Index Down in January : But Surge of Orders Signals Good Quarter

The nation’s economy slowed in January from the previous month, but a surge in business orders could indicate sustained growth in the first quarter, the nation’s purchasing managers said in their monthly survey.

The survey, released today by the National Assn. of Purchasing Management, indicated that the trade group’s composite index declined to 57.4% in January from a revised 61.8% the previous month.

A reading above 50% generally indicates that the economy is expanding, the association says.

“The economy entered 1988 with a healthy, although slower rate of growth than it ended 1987,” said Robert J. Bretz, chairman of the association’s business survey committee. “The growth in new orders was the largest in three months and suggests a respectable if not vigorous economy in the first quarter.

Here are details of the report, based on a survey of purchasing managers at more than 250 industrial companies around the country:

New orders grew for 35% of those reporting, the 13th consecutive month of growth in the category and a possible reflection of an improving performance in exports, the group stated.

Expanded production was reported by 29% of the respondents, compared to 8% who reported production declines. The gain paralleled the growth in new orders.

Vendor deliveries slowed for 30% of those responding, unchanged from December, indicating an increased number of commodities in short supply or on allocation.

Inventories grew for the first time in five months, with 20% reporting higher inventories against 18% reporting declines, in another reflection of slower deliveries and shortages of certain commodities.

Employment edged higher, with 13% reporting job gains against 12% reporting reductions.