Sure sign of recession? Lowest drop in 26 years

NEW YORK (AP) — Business at manufacturers from plastic companies to lumberyards plummeted to the lowest level in 26 years in October, in what many economists called a sure sign of recession.

The Institute for Supply Management said Monday its manufacturing index fell to 38.9, the lowest reading since September 1982 when the country was in a deep recession. Any reading below 50 signals contraction.

“It’s a report that confirms everything we learned in the last couple [of] months — the economy is falling deeper into recession,” said Stuart G. Hoffman, senior vice president and economist for the PNC Financial Services Group.

The index had been hovering near what economists call “the boom-bust” line for most of the year until its sharp fall in September brought it to the lowest level since the aftermath of the Sept. 11 attacks.

Monday’s reading was dramatically below this past September’s reading of 43.5 and far lower than economists’ expectations of 41.5, according to the consensus estimate of Wall Street economists surveyed by Thomson Reuters.

The credit crisis and Hurricane Ike in September battered a manufacturing industry already hurting because of declines in construction and consumer spending.

Martin Marietta Materials Inc., which supplies granite, limestone, sand and gravel to builders, last week slashed its 2008 earnings guidance, saying it expects to earn between $4.25 and $4.65 per share, down from August guidance of $5 to $5.65 per share.

Meanwhile, the overall unemployment rate was 6.1 percent in September for the second straight month, the highest it’s been in five years.

Manufacturing workers have been hit especially hard.

Steelmaker ArcelorMittal this week idled its Cleveland plant, which has 1,450 union employees, as demand declined. Mobile phone maker Motorola Inc. last week reported a third-quarter loss and said it would cut 3,000 jobs by April.