Bloomberg News (1/2, Chandra) reports, "Manufacturing in the U.S. probably contracted in December at the fastest pace in almost three decades as the recession deepened and spread overseas, economists said before a report today. The Institute for Supply Management’s factory index fell to 35.4, the lowest level since 1980, from 36.2 the prior month, according to the median estimate of 57 economists surveyed by Bloomberg News. A reading less than 50 signals contraction.

"Clogged credit markets, the collapse in housing and mounting job losses have hurt demand for everything from furniture and appliances to automobiles, driving General Motors Corp. and Chrysler LLC to the brink of bankruptcy. The slump will extend into 2009 as downturns in Europe and Japan also depress exports.

“Whatever little domestic demand we had earlier has gone away, and the slowdown abroad is taking away the help we got from exports,” said Tim Quinlan, an economic analyst at Wachovia Corp. in Charlotte, North Carolina. “Manufacturing will continue to weaken throughout next year.” Full story: http://www.bloomberg.com/apps/news?pid=20601087&sid=aIs5aEnnxlgo&refer=home