U.S. ISM index falls to 36.2%, lowest in nearly 27 years WASHINGTON (MarketWatch) -- Manufacturing gauges in three major world economies showed sharp contractions in November, according to new data showing fresh recessionary signals as the financial crisis takes a global toll. In the United States, manufacturing activity contracted for the fourth consecutive month, as a gauge of price pressures hit an all-time low, according to a survey of corporate purchasing managers released Monday by the Institute for Supply Management. The November ISM index decreased to 36.2%, the lowest reading since May 1982. Read the full report. The U.S. result for November "promises continued recession," wrote Ian Shepherdson, chief U.S. economist with High Frequency Economics, in a research note. "Manufacturing is in freefall, with output collapsing," Shepherdson wrote. "We see no prospect for near-term improvement." Elsewhere, the purchasing managers' indexes for the euro zone and for the U.K. fell to record lows. See full story. And in China, a gauge of the country's manufacturing activity in November showed the sharpest contraction in the survey's history, which began in 2004. See full story. Nigel Gault, chief U.S. economist with IHS Global Insight, wrote that "miserable readings" from manufacturing indexes in China and throughout Europe are showing the severity of the global downturn. Global economic weakness is bad news for the U.S., which has depended on export growth, he noted. "That key prop is now being knocked away as a global recession takes hold," Gault wrote. "The ISM report is consistent with other economic indicators that show the economy contracting at an exceptionally rapid pace." U.S. manufacturing details The November ISM index for U.S. manufacturing activity decreased to 36.2% from 38.9% in the prior month. Readings above 50% indicate an expansion of the manufacturing economy, while readings below indicate a contraction. Analysts polled by MarketWatch are looking for a November result of 36.5%. Just two of 18 industries were expanding in November: Apparel and paper. The new orders index fell to 27.9% in November, the lowest level since June 1980, from 32.2%. The production index fell to 31.5%, the second lowest reading on record. The prices index, which gauges what proportion of manufacturers are paying higher prices, fell to 25.5% in November, the lowest reading for the index since May 1949, showing that "commodity prices continue to decline at a rapid rate," according to ISM. Just 8% of firms said they were paying higher prices in November. In October, the prices index was at 37.0%. The employment index declined to 34.2% in November, reaching the lowest level since 1991, from 34.6% in October. On Friday, the government will report on nonfarm payrolls for November; analysts are looking for a loss of 350,000 jobs, which would be the largest drop in almost three decades. The order backlogs index fell to 27%, the lowest level since ISM began tracking the data in January 1993, from 29.5%.

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