Purchasing Index Falls For Dec.; Price Pressures Mount

A key barometer of the health of the U.S. manufacturing economy declined in December, but prices paid by factories continued to rise. The National Assn. of Purchasing Management (NAPM) said Jan. 3 its overall index of economic activity fell to 55.5 in December from 56.2 in November. The December index was slightly below the 56.0 level that most economists were expecting. December marked the 11th consecutive month that the NAPM index has been above 50, the level which indicates that the nation's manufacturing economy is growing. A level below 50 suggests the factory sector is contracting. The NAPM said the manufacturing index's price component, which measures the prices paid by manufacturers for raw materials, rose to 65.7 in December from 65.3 in November. Norbert J. Ore, chairman of the NAPM's survey committee, said in a conference call with reporters that the U.S. economy appears to have "plateaued," but there are no signs of a dramatic slowdown. Ore added that price pressures still continued to be restricted to increases in the prices of energy and related components. "We don't see a lot that is moving in prices that is not being driven by the energy picture," he said.