Manufacturing index plummets in September

WASHINGTON -- A key measure of the nation's manufacturing activity fell in September to a seven-year low, nearing a benchmark that indicates a recession, a purchasing manager's group said Wednesday.

The Institute for Supply Management's (ISM) manufacturing index fell to 43.5 in September, down from the August reading of 49.9. Economists were expecting a reading of 49.5, according to a consensus estimate compiled by Briefing.com.

The tipping point for the index is 50, with a reading below that indicating contraction in factory activity. A reading below 41 marks a recession. The index has hovered around the 50 mark for the past 12 months, with an average of 49.6.

One of the key components of the index, new orders, contracted sharply, falling to 38.8 from 48.3 the month before. That marked the 10th straight month of decline in that sector.

In what could be a portent of Friday's September employment report, ISM's employment indicator tumbled to 41.8 from 49.7, marking the second month of decline in the sector.

Economists from Briefing.com expect job losses to spike to 105,000 in September and for the unemployment rate to remain steady at 6.1%.

ISM's production measure contracted sharply in September to 40.8 from its prior reading of 52.1.