U.S. Manufacturing Slows, Exports Rise, Survey Finds

The U.S. economy’s manufacturing sector remained weak in September, although orders for exports increased sharply despite a stronger dollar, the nation’s corporate purchasing managers said Monday.

The purchasing managers index, a widely watched barometer of the economy’s direction, rose to 46% from 45.2% in August and matched the rate for July.

A reading below 50% indicates that the manufacturing sector of the economy is in decline while a reading above 50% indicates growth, according to the National Assn. of Purchasing Management.

Survey responses indicated that new export orders rose during the month while prices continued falling, and production, employment, new orders and inventories all declined.

The mixed picture painted by the managers left economists divided in their opinions about where U.S. manufacturing is headed in coming months.

“This is a report that is filled with crosscurrents. It doesn’t have a black-and-white picture that the economy is doing great,” said Allen Sinai, economist with Boston Co. and Economic Advisers Inc.

The monthly report is based on a survey of purchasing executives in more than 250 industrial companies. The index is a composite of five separate indicators, including new orders, production, vendor deliveries, inventories and employment.

The September overall index represented only a slight upturn from the August reading, which had been the lowest for the index since December, 1982, although the overall index averaged 49.5% for the first three quarters of 1989.

“Past experience indicates that if this average were to continue for the final quarter, it would be consistent with real GNP growth of about 1.7% for all of 1989,” said Robert J. Bretz, survey chairman.

But Bretz also said the index would have to fall below 44% to show economic contraction for the year.

A sharp increase in export orders came despite the strength in the U.S. dollar during September. Some 60.5% of those surveyed reported that their volume of new export orders rose during the month, compared to 56% in August. It was the highest level since April when the new export order index was 62%.