Surveys: Economy still sluggish

Associated Press

NEW YORK — The nation’s manufacturing sector continued to decline in September for the 14th consecutive month, according to a survey released Monday. Though there were signs of improvement, they were likely to evaporate as the effects of the terrorist attacks are digested, economists said.

Separately, the Commerce Department reported Monday that consumer spending rose modestly in August as tax-rebate checks put more money in shoppers’ pockets.

The Tempe, Ariz.-based National Association of Purchasing Management said its index of business activity fell to 47.0 from 47.9 in August. The drop was smaller than the 45.0 reading analysts were expecting. An index above 50 signifies growth in manufacturing, while a figure below 50 shows contraction.

The NAPM report is one of the first gauges of the health of the U.S. economy since the terrorist attacks.

Two of the report’s components showed some improvement, suggesting the economic downturn may have begun to ease its grip on the sector.

"It would have been encouraging in terms of showing stabilization and potential recovering in manufacturing if we didn’t have the new circumstances," said David Orr, chief economist at First Union Securities, referring to the Sept. 11 attacks.

Hugh Johnson, chief investment officer at First Albany Corp., also suggested the fallout on manufacturing had yet to be felt.

"Maybe it’s simply that it’s going to take time before the Sept. 11 attacks start to impact the manufacturing sector," Johnson said. "You would have seen a sharper decline, and I don’t see that."

The NAPM measure is closely tracked because it offers an early reading on the health of the manufacturing sector in September. Its index is based on a survey of purchasing executives who buy the raw materials for manufacturing at more than 350 companies.

But some of those surveyed said it was still too early to determine the impact of the attacks that destroyed the World Trade Center and damaged the Pentagon.

"Our panel of respondents was terribly confused," said Norbert J. Ore, who oversees the monthly report. "They indicated that they were concerned but they really didn’t know what to change, do or anything else during the month."

In another report, the Commerce Department said consumer spending edged higher for the second month in a row, rising 0.2 percent in August, but falling short of analyst expectations. Lower tax rates and federal tax rebate checks also pushed disposable income up for the second consecutive month.

The department reported separately that construction spending fell for the fourth straight month in August despite lower interest rates. Construction activity fell by 1.1 percent in August, the biggest drop in 13 months, led by a drop in spending on commercial projects, including industrial complexes, office buildings and hotels.