Factories mired in recession levels, jobs weak
NEW YORK (Reuters) - U.S. factory activity shrank in September to its lowest since the 2001 recession, and private employers shed jobs for the third time in four months as the financial crisis tightened its grip on the world's largest economy.
U.S. private-sector employers cut 8,000 jobs in September, according to a report by ADP Employer Services, a decrease that took place even without including the renewed financial chaos of the past few weeks.
The Institute for Supply Management said its index of national factory activity fell to 43.5 in September from 49.9 in August, under the level of 50 that separates contraction from expansion.
That was the worst reading since 40.8 in October 2001, when the economy was still mired in the last recession.
"For the first time it's really starting to look like a recession," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.
"Maybe we don't get that number in the fourth quarter necessarily, but it's going to be tough at this point to avoid a recession."
On Wall Street, stocks extended losses after the weaker-than-expected ISM data. Government bonds, which usually benefit more from signs of economic weakness, extended their gains.
The ISM report painted a comprehensive picture of weakness. Its manufacturing employment index hit its lowest since April 2003, falling to 41.8 in September from 49.7 in August.
The outlook also looked bleak, with the manufacturing new orders index sinking to 38.8 in September from 48.3 in August. This was the lowest since January 2001.
Meanwhile, planned layoffs at U.S. companies rose 7.2 percent from a month earlier in September but jumped 33 percent compared with the same month a year ago, according to a report by employment consulting firm Challenger, Gray & Christmas Inc.
(Reporting by Burton Frierson, Editing by Chizu Nomiyama)
