The Institute for Supply Management's gauge of U.S. activity fell more than expected in December, with indicators of new orders and price increases at the lowest levels since the 1940s. Components of the index hit historic lows. New orders fell to their lowest level on records going back to 1948. Prices fell as the number of respondents saying they had paid more in December than in November sank to its lowest monthly reading since 1949.
A reading for the overall index above 50 signals growth; a reading below 50 indicates contraction. The index, based on a survey of the institute's members, has fallen steadily for the last five months as the U.S. economy has deteriorated.
December's reading is the lowest since June 1980, when the U.S. economy was near the end of a six-month recession.
If December's rate of manufacturing activity were to persist for 2009, the nation's gross domestic product would show a 2.7% contraction, said Norbert Ore, chairman of the group's business survey committee. Gross domestic product, the broadest measure of economic activity, decreased at an annual rate of 0.5% in the third quarter of 2008, according to the Bureau of Economic Analysis.
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