The US manufacturing activity has plunged to a record low, indicating that the country has entered into a deeper recession. “This recession is the quickest deterioration in economic activity ever recorded,” an economist explained. This data is accompanied by collapsing global demand, ongoing supply chain disruptions, and high levels of uncertainty.
US Manufacturing Activity Nosediving
The survey from the Institute for Supply Management (ISM) released on Friday has painted a grim picture for the U.S. economy. The index of national factory activity dropped to 41.5 in April, the lowest level not seen since April 2009, and its monthly decline was the biggest since October 2008. A reading below 50 indicates contraction in the manufacturing sector.
According to the ISM, manufacturers were “strongly negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus pandemic and continuing energy market recession.” Chris Rupkey, chief financial economist at MUFG Bank in New York, commented:
The ISM manufacturing survey has come late to the recession forecasting party this time, as this recession is the quickest deterioration in economic activity ever recorded.
Economists believe the U.S. economy entered a recession in mid-March, as also indicated by the Federal Reserve Bank of Chicago’s index.
Indicators Fall to Levels Not Seen Since Great Recession
Many components of the ISM Purchasing Managers’ Index have fallen to levels not seen since the lows of the Great Recession. The new orders sub-index fell to 27.1 in April from 42.2 in March, the lowest since December 2008, and the monthly decline was the largest since April 1951. Oren Klachkin, lead U.S. economist at Oxford Economics in New York, was quoted as saying:
