Manufacturing activity has reached its lowest in 28 years. The situation has arisen as factories are slashing capacity due to a decline in  demand.

The manufacturing demand reached the lowest in December  as demand from companies decreased to a 60-year low. The condition is an outcome of continued credit problems. In a report released by the Institute for Supply Management (ISM), manufacturing contracts fell less than what the analysts had expected.

Last time low manufacturing index decline was 32.4% in the year 1948. A reading of the index below 50 is a sign of overall business contraction.

The ISM report is based on surveys of purchasing managers. A total of 17industries that were surveyed reported contractions. Only two industries — apparel and leather and allied products were in the safe zone with no change reported in the month of November.

“Manufacturing activity continued to decline at a rapid rate during the month of December,” ISM Chairman Norbert J. Ore said in a news release. “The decline covers the full breadth of manufacturing industries, as none of the industries in the sector report growth at this time.”