Demand for industrial control equipment continued to slide during the fourth quarter, as sales dropped 6.1 percent compared to the prior quarter. On a year-over-year basis, the index posted its first measurable decline since 2003 and its largest contraction since the first quarter of 2002. Conditions were similarly weak for the broader measure of demand for industrial controls, the Primary IndustrialrnControls and Adjustable Speed Drives index, which fell 6.7 percent compared to the third quarter of 2008 and nearly 11 percent versus the same period a year ago.rnAfter gradually weakening throughout the year, the drop in demand for industrial control equipment and other types of capital goods accelerated during the fourth quarter as virtually all indicators of economic activity plunged amid the height of the credit crisis. Initial estimates show real GDP declined 3.8 percent, the largest quarterly drop in aggregate economic growth since the early 1980s; even at that, the drop was smaller than expected thanks to a build in business inventories. Business investment as a whole contracted more than 20 percent, led by the largest decline in 50 years on purchases of equipment and software. Nonresi-dential construction registered its first outright contraction in activity since the beginning of 2005; conditions are only expected to worsen in the quarters ahead due to deterioration in underlying demand for new space due to rising job losses, falling industrial output and companies' ongoing difficulties in accessing credit markets.
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