NEW YORK - Business activity for the nation's manufacturers fell in October to the lowest in 26 years, according to an industry report yesterday. The figures provided more evidence that the United States has entered a recession that may be deep and prolonged.

The widely watched manufacturing index, released monthly by the Institute for Supply Management, fell to 38.9, the lowest reading since September 1982, when the country was near the end of a 16-month recession. A reading below 50 signals contraction, while readings above that indicate growth in manufacturing.

"Everything we can tell about the economy just got weaker," said Stuart G. Hoffman, senior vice president and economist for PNC Financial Services Group, of Pittsburgh.

The index had been hovering near what economists call "the boom-bust" line of 50 for most of the year until September, when a sharp fall brought it to the lowest since the aftermath of the Sept. 11, 2001, attacks.

October's reading of 38.9 was sharply below the September figure of 43.5 and lower than the average estimate of 41.5 by Wall Street economists surveyed by Thomson/IFR.

Manufacturers, already hurting from declines in construction and consumer spending, were further battered by the credit crisis and Gulf Coast hurricanes.

For example, Martin Marietta Materials Inc., which supplies granite, limestone, sand and gravel to builders, last week slashed its 2008 earnings guidance, saying it expected to earn between $4.25 and $4.65 a share, down from August guidance of $5 to $5.65 a share.

"Over the past 45 to 60 days, the lack of available business credit has stalled construction activity and further affected demand for our products," the company said.

Other examples:

Steelmaker Arcelor Mittal this week idled its Cleveland plant, which has 1,450 union employees, as demand declined.

Mobile-phone-maker Motorola Inc. reported a third-quarter loss last week and said it would cut 3,000 jobs by April.

Separately yesterday, a Commerce Department report on construction spending showed a 0.3 percent decline in September, the third drop in the last four months.

The construction decline was better than the 0.8 percent drop economists had expected. It left total building activity at an annual rate of $1.06 trillion in September, down 6.6 percent from the year-ago level.

Sliding Downhill

An index reading above 50 signifies growth in manufacturing; below 50 indicates contraction.

Month Manufacturing


November 2007 50.0

December 48.4

January 2008 50.7

February 48.3

March 48.6

April 48.6

May 49.6

June 50.2

July 50.0

August 49.9

September 43.5

October 38.9

SOURCE: Institute for Supply Management

By Sector

Manufacturing sectors that


in October:



Sectors that


16 sectors, including petroleum/coal, wood, fabricated metals, furniture, textiles, machinery, transportation equipment and food/beverages.

SOURCE: Institute for Supply Management