US manufacturing and consumer spending slump to 10-year lows

The depth of the US slowdown was thrown into sharp relief yesterday by surveys showing that both consumer spending and manufacturing output slumped last month to their lowest levels in more than 10 years.

The dollar fell amid growing doubts that any upturn in the beleaguered American economy is in sight.

Factory activity contracted in October at its fastest rate since February 1991, the National Association of Purchasing Management said. Both new orders and factory production posted some of their steepest declines since the NAPM reports began in 1931, during the time of the worst recession in US history.

Norbert Ore, head of its survey committee, said: "The manufacturing sector received a very significant setback driven by the events of 11 September."

He said the sector had shown signs of beginning to mount a recovery prior to the terrorist attacks but warned business would now have to "begin anew to build its way into a growth scenario".

None of the 20 industries in the manufacturing sector reported growth in October and every measure – from orders to inventories – indicated decline.

Meanwhile, spending by consumers dropped at its steepest rate for more than 14 years, as households shunned shops and restaurants amid fears of anthrax attacks and retaliation to US air strikes.

Spending fell by 1.8 per cent, the largest fall since January 1987 when terrible weather hampered spending. Meanwhile personal incomes rose by 0.1 per cent in August, its weakest growth since January 1994.

The dollar fell half a cent against the euro to 90.58 cents.