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KAI RYSSDAL: Oil was one thing driving Wall Street lower today. The nation’s factories were the other. Manufacturing ended a 10-month growth spurt in December. A closely-watched index that a guy named Ben Bernanke is known to pay close attention to sank to its lowest point in almost five years, as our New York bureau chief Jill Barshay reports.
JILL BARSHAY: American manufacturers struggled when the dollar was strong. Their products were too expensive overseas. Now the dollar is weaker. But today’s report from the Institute for Supply Management says manufacturers are still in trouble.
Joel Naroff is the chief economist for Commerce Bank. He blames the housing bust.
Joel Naroff: All the industries that had supplied this booming housing market are no longer able to do that and they’re seeing a real reduction in orders.
That probably means layoffs at factories, says Nigel Gault. He’s an economist at Global Insight. He says today’s numbers don’t mean the economy’s in the tank.
Nigel Gault: It shows that the risks of recession are high. It certainly doesn’t seal the case, because we’ve had manufacturing readings like this in the past without the full economy going into recession.
Both Gault and Naroff say the economy depends on Americans staying employed and spending. They say the service sector will have to stay strong to keep the U.S. out of recession.
In New York, I’m Jill Barshay for Marketplace.
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