U.S. Manufacturing Growth Stalls

FRIDAY, JUNE 2, 1995

American manufacturing shrank in May after 20 straight months of expansion and the overall economy’s growth slowed, a survey of industrial executives showed Thursday.

It was the first pullback by the manufacturing sector since August 1993 and surprised economists who were expecting continued, but slower, expansion at the nation’s factories.

The National Association of Purchasing Management said its index of manufacturing, a barometer of industrial health derived from survey results, fell to 46.1 percent from 52 percent in April.

An index reading above 50 percent indicates an expansion of factory activity, while a reading below 50 percent indicates a decline. A sustained reading below 44.5 percent indicates a recession.

“I think this is simply a reflection of continued slowdown at the consumer end of the economy finally taking some dramatic effect on the manufacturing sector,” said Ralph G. Kauffman, chairman of the group’s survey committee.

Through May, the index’s performance would translate into a 1995 gross domestic product gain of about 2.8 percent, Kauffman said. The government said Wednesday that the economy grew at an annual rate of 2.7 percent in the first quarter.

The purchasing mangers’ report also showed prices continued to rise, but at a slower rate.

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