Economy Slows for Second Month, Purchasers Report

The U.S. economy slowed in June for the second straight month, the nation’s purchasing managers said today in their monthly report.

Production by the nation’s factories was the only indicator to increase, while new orders declined for the first time since May, 1986, and inventories also fell, according to the report by the National Assn. of Purchasing Management.

“The total economy continued down the path toward slower growth as it ended the second quarter,” said Robert J. Bretz, chairman of the Tempe, Ariz.-based trade group.

“The manufacturing economy declined for the second consecutive month as all indicators except production registered declines,” he said. “The best news is that inflation appears to be slowing at a faster pace than the overall economy.”

The group’s closely watched Purchasing Managers’ Index slumped to 48.8% from 49.7% in May. The decline put the index at its lowest level since July, 1986 when it was 48%. The May decline was the first in 33 months.

A reading above 50 indicates the economy is generally expanding; below 50, that the economy is generally declining.

The group said the index has averaged 51.4% for the first half of 1989 but 50.5% for the second quarter. It said the second-quarter figure indicates growth in the gross national product, the value of all goods and services produced, of about 2% for the year.

The group said the index would have to fall below 44% before signaling a decline in the inflation-adjusted GNP.