Manufacturing Index Drops to 26-Year Low

WASHINGTON -- A trade group says a measure of U.S. manufacturing activity fell to a 26-year low in November, as new orders fell for the twelfth consecutive month.

The reading of 36.2 from the Institute for Supply Management's (ISM) monthly survey of manufacturing activity is below October's 38.9. It is also worse than Wall Street economists' expectations of 38.4 as measured by a survey by Thomson Reuters.

A reading below 50 indicates the sector is contracting.

The ISM says the November figure is the lowest since May 1982 when the economy was in the midst of a painful recession.

Also, construction spending fell by a larger-than-expected amount in October, an indication The problems facing developers in the form of a sinking economy and severe credit crisis are deepening and likely to persist.

The Commerce Department says construction spending dropped by 1.2% in October, much bigger than the 0.9% decline that many analysts had expected.

The weakness was led by another sizable drop in home construction, which has fallen every month but two over the past two-and-a-half years. Nonresidential building also weakened as developers face tougher times getting financing because the banking system is going through a severe credit squeeze.