US Manufacturing Falls to Lowest Since 2009

According to the Institute for Supply Management’s, a not for profit supply management company, most recent survey, the United States’ manufacturing sector index fell to 47.8%, the lowest since the recession in 2009.  Index ratings above 50 indicates an expansion in manufacturing.  Last month, the index was 49.1%.  Stocks took a tumble after the survey was released.

Survey responders blamed higher cost of business for the downturn of their business, which also diminished hiring.  Higher costs are mostly due to the tariffs in place from the US-China trade war.  With recent talks going nowhere, businesses and analysts are not confident for the next trade talks set to take place later this month.  Global trade is also a significant issue. 

This decline continues to feed recession woes, not only locally but globally.  More analysts are predicting a recession in the near future – and more signs are pointing towards it. 

The President is blaming the Federal Reserve for the fall of the manufacturing sector.  It’s no secret he believed the Fed should have dropped rates lower than the two rate drops that have occurred.  Trump was pushing for rates closer to zero, or even negative rates. 

ISM predicts the slowdown will continue.  Demand and backlogs are low, and food industries are saying the tariffs are starting to hurt their businesses as well.  The tariffs are hurting our local businesses – with no end in sight. 

In the latest survey, only three manufacturing industries reported growth this last month.  ISM tracks a total of 18.  This is also concerning as the previous month showed nine industries reporting growth. 

Another blip in the report could be the three-week ongoing strike at GM Motors.  Some believe this is also causing the decline this last month. 

Overall, economists and analysts say the risk of recession is real and coming soon.  Expectations for a stronger economy is looking bleak as demand softens and costs runs high.  The Dow, S&P 500, and the Nasdaq are all trending down, losing about 1% from yesterday.