By Courtney Schlisserman
April 1 (Bloomberg) -- U.S. manufacturing probably shrank further in March, a report may show today as the recession enters its 17th month and becomes the longest since the 1930s.
The Institute for Supply Management’s factory index was at 36 last month, compared with 35.8 in February, according to the median of 74 estimates in a Bloomberg News survey. Readings less than 50 signal contraction. Another report may show companies cut more than 600,000 jobs for a fourth month.
The recession that began in December 2007 will probably continue until at least late this year, according to Federal Reserve projections. With sales tumbling at manufacturers from General Motors Corp. to Ingersoll-Rand Co. to steelmaker Nucor Corp., an industrial rebound is also unlikely for months, analysts said.
“The downturn in global growth and some other nagging headaches are going to create headwinds” for an economic recovery, said Zach Pandl, an economist at Nomura Securities International Inc. “Even if you do see slightly slower contraction in some areas of manufacturing, the level of activity is still falling, and at a decent rate.”
The Tempe, Arizona-based Institute for Supply Management is scheduled to release its report at 10 a.m. New York time. Forecasts in the Bloomberg survey ranged from 30 to 39. The index plunged to a record low of 32.9 in December. A measure of prices paid may increase to 33 from 29, the survey said.
ADP Report
ADP Employer Services may say U.S. companies cut payrolls by 663,000 last month, according to the median forecast.
The U.S. lost 4.38 million jobs in the 14 months that ended in February, according to the Labor Department, which is scheduled to release its March employment data on April 3.
A Commerce Department report today may indicate spending on construction projects fell in February for a fifth straight month. Still, the National Association of Realtors may say contracts to buy previously owned homes stabilized after a 7.7 percent drop, and earlier Commerce reports showed home sales and orders for durable goods rose unexpectedly in February.
Consumer spending, which fell at a 4.3 percent rate in the last three months of 2008, also showed signs of a rebound in January and February. Purchases advanced 0.2 percent in February, the Commerce Department said last week, after a 1 percent gain in January.
Shrinking Economy
The economy shrank at a 6.3 percent annual pace in the fourth quarter of 2008, the most since 1982, and business investment fell at a 22 percent rate.
Among manufacturers, automakers have been the hardest hit.
President Barack Obama earlier this week gave General Motors and Chrysler LLC deadlines to “fundamentally restructure” or lose the government aid that has kept them running. He rejected the companies’ recovery plans and forced GM Chief Executive Officer Rick Wagoner to resign.
The administration also is providing aid for financial institutions in a bid to unclog credit markets and is implementing a $787-billion stimulus plan designed to create or save millions of jobs and spur spending through tax cuts.
The global recession is hurting manufacturers by squeezing their overseas customers. U.S. exports declined for a sixth straight month in January, the Commerce Department said March 13. Sales of automobiles, semiconductors, telecommunications gear and drilling equipment to overseas buyers all dropped.
National Semiconductor Corp., the maker of chips for the five largest mobile-phone makers, said it plans to cut more than 1,700 jobs, or about 25 percent of its workforce.
“The worldwide recession has impacted National’s business as demand has fallen considerably,” Chief Executive Officer Brian Halla said in a March 11 statement.
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ADP ISMConstruct Pending
Payroll Manu Spending Homes
,000’s Index MOM% MOM%
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Date of Release 04/01 04/01 04/01 04/01
Observation Period March March Feb. Feb.
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Median -663 36.0 -1.9% 0.0%
Average -662 35.9 -1.6% 0.5%
High Forecast -525 39.0 1.0% 5.6%
Low Forecast -750 30.0 -3.0% -3.0%
Number of Participants 30 74 52 37
Previous -697 35.8 -3.3% -7.7%
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4CAST Ltd. -700 37.0 -2.5% 4.0%
Action Economics -655 35.5 -1.1% 0.1%
AIG Investments --- 38.0 0.0% 4.0%
Aletti Gestielle SGR --- 36.5 --- ---
Ameriprise Financial Inc -640 36.0 -2.5% -3.0%
Argus Research Corp. --- 36.5 -0.7% ---
Bank of Tokyo- Mitsubishi --- 33.2 -1.7% ---
Bantleon Bank AG --- 36.0 --- ---
Barclays Capital --- 36.0 -2.0% 4.5%
BBVA -674 35.8 0.2% -2.6%
BMO Capital Markets -660 35.0 -2.0% 2.0%
BNP Paribas -635 33.5 -0.5% ---
Briefing.com -635 37.0 -2.0% -1.0%
Calyon --- 35.2 --- ---
Castlestone Management LT --- 36.5 --- ---
CIBC World Markets --- 39.0 --- ---
Citi --- 34.0 -3.0% ---
ClearView Economics --- 37.0 -1.0% -3.0%
Commerzbank AG --- 36.0 --- -1.0%
Credit Suisse --- 36.5 -2.0% ---
Daiwa Securities America --- 36.0 -2.5% ---
Danske Bank --- 36.5 --- ---
DekaBank --- 36.5 -2.0% 1.0%
Desjardins Group --- 35.8 -1.5% ---
Deutsche Bank Securities --- 36.0 -3.0% -2.0%
Deutsche Postbank AG --- 36.2 --- ---
DZ Bank -670 36.5 --- -3.0%
First Trust Advisors --- 37.5 -1.0% ---
Fortis --- 37.0 --- 2.0%
FTN Financial --- 36.0 --- ---
Goldman, Sachs & Co. --- 37.0 -2.0% ---
Herrmann Forecasting -716 38.4 0.4% 5.3%
High Frequency Economics -700 34.0 -3.0% 4.0%
HSBC Markets -525 37.0 -0.8% 2.5%
IDEAglobal -600 35.0 -1.5% -1.0%
IHS Global Insight --- 34.6 -2.5% ---
Informa Global Markets -625 37.0 -2.2% -2.0%
ING Financial Markets -750 35.4 -1.5% 2.0%
Insight Economics --- 35.0 -1.5% ---
Intesa-SanPaulo --- 36.5 -2.5% ---
J.P. Morgan Chase --- 36.5 -2.4% 4.0%
Janney Montgomery Scott L -665 30.0 -0.2% -1.8%
Landesbank Berlin --- 36.5 -1.8% ---
Landesbank BW --- 35.6 --- ---
Lloyds TSB -675 36.0 -2.5% -2.0%
Maria Fiorini Ramirez Inc --- 35.0 --- ---
Merrill Lynch -720 34.5 -2.0% ---
Mizuho Securities -670 35.0 -2.5% -2.0%
Moody’s Economy.com -647 36.0 -2.2% 1.5%
Morgan Keegan & Co. --- --- -1.6% ---
Morgan Stanley & Co. --- 34.0 -0.5% ---
National Bank Financial --- 37.0 --- ---
Natixis -650 36.0 --- 5.6%
Newedge --- 35.5 --- -2.0%
Nomura Securities Intl. -700 36.3 --- ---
Nord/LB -680 36.0 --- ---
PNC Bank --- 34.5 -0.8% ---
Raymond James --- 36.0 --- ---
RBS Greenwich Capital --- 34.0 --- ---
Ried, Thunberg & Co. --- 35.0 -2.2% 0.0%
Schneider Foreign Exchang -637 37.0 -0.6% 0.2%
Scotia Capital -700 35.5 --- -2.0%
Societe Generale --- 35.8 --- ---
Stone & McCarthy Research --- 37.3 -1.5% ---
TD Securities -700 36.5 --- 5.0%
Thomson Reuters/IFR -675 35.0 1.0% 0.0%
Tullett Prebon --- 35.6 -1.0% -1.0%
UBS Securities LLC --- 37.5 -3.0% 1.0%
Unicredit MIB --- 37.0 -2.5% ---
University of Maryland -618 36.0 -2.0% 0.0%
Wachovia Corp. --- 35.7 -1.0% ---
Wells Fargo & Co. -645 35.5 -1.1% 0.1%
WestLB AG -650 36.0 -2.3% ---
Westpac Banking Co. -630 36.0 -1.5% ---
Wrightson Associates --- 35.0 -2.2% 0.0%
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To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net.
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