January Report Shows Sharp Economic Dip

The nation’s economy declined sharply in January for the ninth consecutive month and at the greatest rate of decline since December, 1982, according to a nationwide survey of purchasing executives released today.

The National Assn. of Purchasing Management said its monthly index fell in January to 45.2%, down from 46.7% in December.

A reading below 50 indicates that the U.S. manufacturing economy is generally declining; above 50, that it is generally expanding, the group said.

Financial markets closely watch the index for clues to the state of health of the economy.

The new orders portion of the group’s survey fell significantly in January, the employment component declined for the 11th consecutive month and the inventories index was the lowest since 1986.

The new export orders portion of the survey continued to show relative strength, said the group, which is based in Tempe, Ariz.

The seasonally unadjusted export orders index increased to 55.5% from 53% in December, the same rate of growth as in October and November, 1989.

“The manufacturing economy entered 1990 on a dismal note: The greatest rate of decline since the second month of this lengthy economic recovery,” said Robert J. Bretz, chairman of the group’s survey committee.

“All indicators in January confirmed the anemic condition of the economy, with the exception of new export orders, which continues to register relatively strong growth,” he said in a statement.

He said the group’s overall monthly index averaged 48.9% for all of 1989. Based on experience, that figure is consistent with real gross national product growth of about 2.2%.