Manufacturing Output Down for 4th Month

NEW YORK — Manufacturing activity declined in September for the fourth straight month as global economic turmoil hammered U.S. exports. But the slowdown was less severe than expected due to stronger production at General Motors.

The National Assn. of Purchasing Management reported Thursday that its monthly index of business activity was at 49.4% last month, unchanged from August. Any reading under 50% is a sign of contraction in the industrial sector.

Economists had predicted the index would reveal a sharper decline. But GM’s continued recovery from devastating strikes in June and July helped offset the growing economic problems that are hindering American manufacturers.

“Major concerns continue to focus on Asia and its effect on the domestic economy--cheaper imports, reduced exports and currency instability,” said Norbert J. Ore, chairman of the NAPM’s survey panel.

The private group’s report is compiled from a survey of corporate purchasing executives nationwide. It is widely followed by economists because it is often the first indicator of how the economy performed in the previous month.

Exports continued to contract in September, although at a slower pace, while imports grew at a faster clip. Prices decreased at a faster rate.

The manufacturing sector’s suffering, combined with other signs of slowing growth, suggest that the Federal Reserve will need to cut interest rates again, said Mark Vitner, an economist at First Union Capital Markets in Charlotte, N.C.

Despite the manufacturing slowdown, September marked the 89th consecutive month of U.S. economic growth, the purchasing group said.

The report came as the government said separately that construction spending rose a slim 0.1% in August as government outlays for residential building flattened and spending on commercial projects continued to slide.

Overall construction spending inched up to a seasonally adjusted annual rate of $651.6 billion, the Commerce Department said.

That followed a similarly mild 0.1% increase in July--smaller than first reported--as residential building broke a record, but spending for commercial projects fell.

Spending on commercial construction projects fell for the third straight month in August, by 0.5% to a seasonally adjusted $164.3 billion. Office and factory construction were barely up, while spending on other business buildings such as hotels and shopping centers dropped.

Also Thursday, the Labor Department said weekly jobless claims fell to their lowest level since April, surprising analysts who expected unemployment to rise as Asia’s economic problems spread to other parts of the world.

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Construction Spending

In billions of dollars, seasonally adjusted:

1998, August: $651.6 billion

* Source: Commerce Department

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Purchasing Managers Index

1998, September: 49.4%

* Source:National Assn. of Purchasing Management