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MANUFACTURING & PRODUCTION

• The monthly survey conducted by the Institute for Supply Management gauged the September PMI at 43.5%, indicating that the manufacturing economy contracted in September.  New orders, production, employment, and order backlogs all contracted for the month.  The prices paid component shrank from 77.0% in August to 53.5% for September.
• Industrial production declined 2.8% in September following a 1.1% drop in August.  While in keeping with the recession scenario, output was also negatively impacted by hurricanes Gustav and Ike and an aircraft manufacturer strike.  Factory output decreased 2.6%, mining production plunged 7.8%, and utilities output increased 2.2% for the month.
• Capacity utilization slumped from 78.7% in August to 76.4% for September, with the steepest declines in the manufacturing and mining industries.

LABOR MARKETS

• Nonfarm payrolls fell by another 159,000 jobs in September, bringing the 2008 total loss to 760,000.  The September declines were fairly widespread affecting both the goods-producing and service-providing sides of the economy.  Manufacturing employment decreased by 51,000; construction payrolls slipped by 35,000.  Retail trade declined by 40,100 jobs for the month; payroll employment also fell in transportation, financial activities, professional and business services, and the leisure and hospitality industry.  There were some nominal increases in the education, health care, and government categories.
• The unemployment rate was unchanged at 6.1% from August to September.

SALES

• Retail sales fell 1.2% in September after declining 0.4% in August.  Auto sector sales in September decreased 3.8%, leaving sales ex-auto down 0.6%.  Health and personal care store sales rose 0.4% for the month, and gas station sales increased 0.1%.  All other remaining sales categories declined for the month, including a 2.3% drop in furniture and furnishings sales, a 1.5% decline in sales at electronics stores, and a 0.6% fall in home improvement store sales.

PRICES

• The Consumer Price Index was unchanged from August to September, curbed by a 1.9% decline in energy prices.  Food prices, however, increased 0.6% for the month.  Excluding energy and food, core CPI rose 0.1% for the month.  Over the past 12 months, the CPI has increased 4.9% and core CPI rose 2.5%.
• The Import Price Index declined 3.0% in September after falling 2.6% in August.  Petroleum import prices decreased 9.0% for the month, while prices of non-petroleum imports slid 0.9%.  Overall export prices declined 1.0% in September.
• Wholesale prices also eased in September, as the Producer Price Index decreased 0.4%.  Food prices advanced 0.2%, but energy prices dropped 2.9%.  Core PPI increased 0.4% for the month.

FEDERAL RESERVE

• On October 8, 2008, the Federal Reserve, along with the Bank of Canada, the Bank of England, the European Central Bank, Sveriges Riksbank (Bank of Sweden), and the Swiss National Bank announced policy interest rate reductions.  The actions were strongly supported by the Bank of Japan.  The Fed Open Market Committee lowered the target federal funds rate by 50 basis points to 1.50%, while the Fed Board of Governors approved a 50 basis-point reduction in the discount rate to 1.75%.