Corporate purchasing agents slashed their orders for raw materials last month and in a survey released yesterday warned that production rates are slowing and layoffs are growing.
"Business plummeted in April," the National Association of Purchasing Management reported after polling 225 industrial companies.
The trade association said 45 percent of the firms surveyed reported new orders declined last month, compared with only 25 percent showing a downturn the month before.
The purchasing agents called it, "the greatest decline in the rate of new orders since World War II, except for three months near the end of the last recession."
For the last three months the survey has shown a steady decline in new orders and a corresponding increase in the number of companies reporting their producton is off. In February, 15 percent of the companies said production was down from the month before, in March, 20 percent reported declines and in the April survey 34 percent of the firms said business was worse.
Other indicators in the purchasing agents' survey provided additional evidence that the economy is entering a recession.
"The rate of employment continued to fall at a slightly faster pace, probably reflecting several plant closings in major industries," the study said. Employment at surveyed companies was down for the sixth consecutive month, something that hasn't happened since mid-1975. The number of companies reporting lower employment jumped to 25 percent from 20 percent in March; only 14 percent of the firms reported higher employment in April, when seasonal industries usually begin to gear up.
Because of poor business, may companies that normally keep their plants working all summer said they plan to shut down for vacations or maintenance this year. Normally about 40 percent of the companies surveyed schedule summer shutdowns while 60 percent remain open. But the April poll found 50 percent of the companies planning to close, most of them during the month of July.
The executives who do the buying for major businesses said prices they pay for materials are continuing to rise, but "at a noticeably slower rate."