Manufacturing, once considered a Trump administration triumph, just had its second consecutive month of contraction.
With the trade war escalating and exports taking a nosedive, a gauge of U.S. manufacturing showed the lowest reading in more than 10 years, CNBC reported.
On the PMI Index — the U.S. manufacturing purchasing managers’ index from the Institute for Supply Management (ISM) — readings below 50 percent are a sign that business conditions are getting worse. Above 50 percent, conditions are getting better.
Manufacturing fell to 47.8 percent on the PMI in September — the lowest since June 2009 when the Great Recession ended, according to the ISM report. The new export orders index was 41 percent, the lowest since March 2009, down from August’s 43.3 percent, according to ISM data.
The sharp decline in the index raised the volume on recession. The Dow Jones Industrial Average lost more than 200 points against earlier gains Tuesday.
“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019,” ISM Chairman Timothy Fiore said in a statement.
President Donald Trump quickly insisted it wasn’t his fault, blaming the Federal Reserve for keeping U.S. interest rates too high. The Fed “allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected,” he tweeted. “Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!”
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Just three of the 18 U.S. manufacturing industries tracked by ISM reported growth, down from nine in the prior month.
“Chinese tariffs going up are hurting our business. Most of the materials are not made in the U.S. and made only in China,” a food and beverages manufacturer executive told Marketwatch.
The “U.S. manufacturing sector is in the midst of a recession,” said Joel Alcedo, Macro Quant Strategist & Data Scientist, BNP Paribas Securities, according to The Bond Buyer.
