Car sales drop, manufacturing contracts amid credit crisis

November 4th, 2008 - 3:42 am ICT by IANS  

Washington, Nov 4 (DPA) Major automakers Monday reported a sharp drop in October sales, while the manufacturing sector contracted the most in 26 years as the credit crisis continued to spread to the wider US economy.Ford Motor Co said monthly sales dropped 30 percent from the same period a year earlier. Japanese carmaker Toyota Motor Corp reported a drop of 23 percent, Honda Motor Co’s sales fell 25 percent and Nissan Motor Co was down 33 percent.

It marked the second straight month of sharply lower sales as potential buyers struggled to get auto loans in a weakening economy.

Access to credit for consumers and banks has been severely restricted amid a financial and housing crisis that has left banks struggling to raise capital and wary of offering new loans.

The Institute for Supply Management’s factory index dropped to 38.9 from 43.5 in September, the lowest level since September 1982. A reading of below 50 marks a contraction.

The depressing manufacturing figures could prompt another interest rate cut by the Federal Reserve and fresh impetus for a second stimulus package being considered by Congress. The US central bank
slashed its benchmark federal funds rate to one percent last week.

“Manufacturing is definitely in a deep recession right now,” John Lonski, chief economist of Moody’s Capital Markets Group, told Bloomberg Television.

The US economy as a whole contracted by an annualised 0.3 percent in the third quarter, according to an initial government estimate
last week.

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