US manufacturing activity contracted for a sixth straight month in January, signaling that one-fifth of the world's largest economy is in recession, a key industry report showed today.
The National Association of Purchasing Management (NAPM) reported today its manufacturing index fell to 41.2 - its lowest level since March 1991 at the tail end of the last recession.
The closely watched gauge fell from 44.3 in December and was well below the 43.6 reading forecasted by economists.
"This has confirmed the feeling that the manufacturing sector is in recession. It confirms the impression that the manufacturing sector is in free-fall," said Mr Anthony Karydakis, senior financial economist at Banc One Capital Markets in Chicago.
The manufacturing sector has been struggling to cope with an overhang of inventories built up when the economy was booming in the first half of 2000 and with weakening export sales and consumer demand for big-ticket items.
The sector's woes, which just months ago appeared contained, are now threatening to spill over into the broader economy.
NAPM chairman Mr Norbert Ore said the US economy was "awfully close" to a no-growth scenario right now but may be at or near a bottom right now.
Reuters