Purchasing Agents Report : Orders and Production Decline in December

NEW YORK —  The nation’s economy ended 1986 with the same pattern of slow growth with which it began, corporate purchasing managers said in a survey released Sunday.

The buying agents’ trade group, the National Assn. of Purchasing Management, noted that both industrial production and new orders usually decline in December, and last month was no exception.

It also said that vendor deliveries slowed somewhat in December, apparently more as a result of the protracted labor shutdown at USX Corp.’s steel subsidiary than from being unable to keep up with orders. The survey said employment continued at a depressed level, showing only a slight improvement from November.

“In December, the economy continued to grow at the same modest rate exhibited over the past five months,” Robert J. Bretz, chairman of the group’s business survey committee, said in a statement.

“We would anticipate a slightly better January after the traditional seasonal dip in December,” said Bretz, who also is director of materials management for the office supply company Pitney Bowes.

The purchasers’ group said its composite index of economic activity edged up to 51.8% in December from 51.3% in November. A reading above 50% generally signals that the economy is still expanding, the association says.

Each month the group surveys the executives in charge of purchasing materials and products at 250 U.S. industrial companies. The association has about 30,000 members overall.

The group said that, as usually happens in December, inventory levels fell significantly last month.

It said that 41% of its members reported lower inventories, representing the highest level of such reports since December, 1982.

For the fourth consecutive month, more purchasers reported price rises in December rather than lower prices by a margin of more than three to one.

Twenty-two percent of those surveyed reported an increase in new orders, while 23% said orders declined and 55% reported no change.

Nineteen percent, meanwhile, reported higher production levels at their companies, while 25% said output fell. Most of the respondents said they expected production to expand in January as industry moves to replenish its year-end inventories trimmed by the seasonal drop in output.

Employment showed a slight improvement, with 29% of the purchasing agents reporting lower employment at their companies, compared to 32% in November. Nine percent said their companies added jobs, which was unchanged from the previous month.

For the fourth straight month, more of the purchasers reported an increase in prices (18%) than reported lower prices (5%).

The survey results seemed to have a more cautious tone about the economy than some recent data from the federal government.

On Tuesday, for example, the Commerce Department said the government’s main gauge of future economic activity, the leading indicators, jumped 1.2% in November, the biggest increase in seven months.

But economists outside the government were divided over whether the surprisingly strong advance was a true signal of a rebounding economy or an overstatement of growth prospects for next year.