1 October 2002, 08:57  Chicago Manufacturing Index Fell to 48.1 in September

/www.bloomberg.com/
By Siobhan Hughes
Chicago, Sept. 30 (Bloomberg) -- Manufacturing in the Chicago area declined in September for the first time in eight months, a survey of purchasing executives showed.
The National Association of Purchasing Management-Chicago said its factory index fell to 48.1 this month. That was down from 54.9 in August and the first reading below 50 -- which indicates a contraction -- since January.
`` Today's report suggests the retrenchment is getting out of control,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi Ltd. in New York. ``The risk of a double-dip in economic activity has become a reality.''
Stocks fell and Treasury securities soared after the report, which was the first sign that manufacturing may be falling back into recession. The Institute for Supply Management releases its national factory index tomorrow, and some economists already have revised their estimates to suggest a decline after today's Chicago report.
Economists had expected a reading of 53 in the Chicago index, based on the median of 45 forecasts in a Bloomberg News survey. The index had been higher than 50 since January, after an 18-month slump. That period of contraction was the longest since the 1981- 1982 recession.
The Chicago purchasers' index of new orders fell to 49.2 from 55.8 in August. The production index declined to 52.8 from 57.1. The index of order backlogs dropped to 39.9 from 48.3 last month.
The group's index measuring inventory levels declined to 39.3 from 41.4. The region's manufacturers have been cutting inventories since March 2000.
The prices-paid index fell to 57.6 this month from 63.6 in August.
The Dow Jones Industrial Average fell 221 points, or 2.9 percent, and the Standard & Poor's Index of 500 stocks fell 25 points, or 3 percent, at 10:30 a.m. New York time. The Treasury's 4 3/8 percent note maturing in August 2012 rose 23/32 point, pushing down its yield 9 basis points to 3.57 percent. A basis point is 0.01 percentage point.
Illinois Tool Works Inc., a maker of products from welding equipment to auto parts, this month reduced its profit forecast for the third quarter after sales slowed in August.

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