Washington, Feb. 1 (Bloomberg) -- An index of U.S. manufacturing fell in January to itslowest point in almost 10 years, according to a survey of industry executives. It was thesecond report this week to show signs of economic weakness similar to those in the lastrecession. The National Association of Purchasing Management's factory index fell to 41.2 lastmonth from 44.3 in December. The indexes gauging production and orders fell to almosttwo-decade lows. The overall index dropped to a level it hadn't reached since the end of the 1990-91recession and below the point that NAPM says corresponds with a contraction in thebroader economy. It follows a report Tuesday of the biggest decline in consumerconfidence since October 1990 and a half-percentage-point cut yesterday in the FederalReserve's benchmark interest rate to stop the economy's slide. ``It means the economy is awfully sick,'' said Mark Vitner, an economist with First UnionCorp. in Charlotte. ``We are either in recession or right at the doorstep. The NAPM reportis consistent with recession, the durable goods report was consistent with recession,and GDP showed us right on the edge.''

Market Reaction
Treasury securities rose on expectations of further interest rate cuts from the FederalReserve. Central bankers twice reduced their benchmark lending rate last month by atotal of 1 percentage point. The first came Jan. 3, the day after NAPM announced alarger-than-expected decline in its December factory index. After their second half-pointcut yesterday, Fed officials said current conditions, including a decline in manufacturing,``called for a rapid and forceful response.'' The Treasury's 10-year note rose 1/4 point, pushing down its yield 4 basis points to 5.08percent. Stocks gained. The Dow Jones Industrial Average rose 96 points, or 0.9percent, to close at 10983.63. The Nasdaq Composite Index rose 10 points, or 0.4percent, to close at 2782.79. The economy grew at a 1.4 percent annual rate in the final three months of 2000, theslowest pace in 5 1/2 years. This month's NAPM reading is consistent with a 0.6 percentannualized contraction in gross domestic product, NAPM said. The decline was led by slumps in production and orders. The index measuring neworders fell to 37.8 from 42.5 in December and was the lowest since November 1981.NAPM's production index fell to 37.9 from 43.5 in December and was the lowest sinceMay 1982.

Auto Production
Motor vehicle production dropped by 24.4 percent at an annual rate during the fourthquarter, the largest since a 33.7 percent pace of decline in the first quarter of 1996. Thedrop in auto production shaved a full percentage point off fourth-quarter growth,Commerce officials said. ``Yesterday's announcement about lower interest rates was welcome news forconsumers,'' said Ford Motor Co. Vice President Bob Rewey ``We believe the presentweak period of economic performance will be relatively brief and should give way toimproved business conditions later this year.'' Ford's January sales of U.S.-made carsand light trucks were 11 percent below those of January a year ago. General MotorsCorp. sales were down 5.2 percent. Both declines were less than the automakers hadexpected. Sales fell 16 percent at DaimlerChrysler AG's Chrysler arm, the company reported.DaimlerChrysler, the world's fifth-largest automaker, said Monday it would cut 26,000jobs at Chrysler over the next three years as it tries to return the U.S. unit to profitability.

Auto Slowdown
The slowdown in auto production has spilled-over to firms that produce auto parts. DelphiAutomotive Systems Corp., the world's largest auto-parts maker, said last week it wouldidle about 5,000 workers this week because of production cuts at GM's Rival VisteonCorp. will idle at least 500 workers because of slowdowns at Ford Motor Co., thecompany said last week. Telecommunications equipment makers are also experiencing a slowdown. LucentTechnologies Inc., the biggest maker of phone equipment, said last week it will cut16,000 jobs, 15 percent of its workforce, in a bid to return to profitability as quarterlysales declined for the first time. The Conference Board reported Tuesday its consumer confidence index fell last month to114.4 from 128.6 in December, the biggest drop since a 23-point decline in October1990. Moreover, the decrease -- the fourth straight -- was largely due to the lowest six-month outlook in more than seven years. Because consumer spending represents two-thirds of the economy, such a large decline in confidence may suggest the almost 10-year expansion is stalling.

Personal Spending
U.S. personal spending on goods and services increased 0.3 percent in December,driven by higher utility costs, and federal payments to farmers helped drive incomes 0.4percent higher, Commerce Department figures showed today. The spending increase was the same as the prior two months, according to theCommerce Department's statistics. Excluding utilities and services, spending for autosand other durable goods declined 1.9 percent in December, the third straight monthlydecrease. ``Consumers are holding back,'' said Cynthia Latta, an economist at Standard & Poor'sDRI in Lexington, Massachusetts. ``They are concerned about energy prices and jobsand that keeps people from spending.'' The number of U.S. workers filing new claims for state unemployment benefits rose lastweek to the highest since late December, the Labor Department reported today. Initial jobless claims increased by 32,000 to a level of 346,000 for the week ended Jan.27, according to the Labor Department. That was the most since a 2 1/2-year high of380,000 in the week ending Dec. 30.