U.S. Factory Contraction Got Worse in September

WATERBURY, CT - OCTOBER 21: The remaining interior of a shuttered factory connected to the brass industry stands in what was once a vibrant manufacturing city on October 21, 2018 in Waterbury, Connecticut. Known as "Brass City", Waterbury, like many manufacturing cities in America, started to see a decline in …
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The U.S. manufacturing sector shrank for the second consecutive month in September, a clear sign that sluggish global growth and trade tensions are weighing on the U.S. economy and challenging President Donald Trump’s attempt to bolster U.S. manufacturing.

The Institute for Supply Management said on Tuesday that its manufacturing index, one of the most closely watched gauges of factory activity, fell to 47.8 in September from 49.1 in August. Readings below 50 indicate activity is contracting across the manufacturing sector, while those above 50 signal expansion.

Economists had expected the index to rise to the break-even level of 50, which would have indicated that growth had stalled. Instead, the index fell further into contraction territory.

“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019. Overall, sentiment this month remains cautious regarding near-term growth,” Tim Fiore, Chair of the Institute for Supply Management Manufacturing Business Survey Committee, said in a statement.

Export orders fell into severe contraction in September, pulling down the overall index. The export order portion of the index hit 41.0, the third straight month of contraction.

Total orders were slightly better than in August but still in contraction. Production suffered its second consecutive month of contraction. The employment gauge also suffered a second month of contraction.

The overall index reading was the lowest since 2009. While production and employment in manufacturing remain well above the levels seen before the election of Donald Trump, who made the revival of U.S. manufacturing a key plank of his 2016 platform, the recent slowdown and contraction in manufacturing could provide fodder for his 2020 Democratic rivals.

 

 

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