US Levels Drop to Near 3-Year Low Manufacturing

Manufacturing activity in the United States fell last month, dropping to its lowest level in almost three years, even lower than the pace that started the most recent presidential term.  This signals that the world’s biggest—and once strongest—economy may be reaching the end of the longest expansion in history.  

Analysts say that this trend in manufacturing has been driven by weaker demand for goods made in the United States. As a matter of fact, US factories are growing reluctant to produce any stock, as they might not be able to sell it, as suggested by this month’s Institute for Supply Management’s survey.

The report parallels quite a notable drop in many regional manufacturing surveys, all of which suffered big hits after US President Donald Trump threated new tariffs on a handful of Mexican imports and the shortage of orders from the recent crisis at Boeing. 

All of this contributes, then to the Institute for Supply Managements nationwide manufacturing index plummeting to its lowest level since October of 2016, a drop of 0.4 points to 51.7 percent.

What is, perhaps, fortunate about this is the analysts had, more or less, expected only modest growth; so the numbers don’t come as a surprise.  Still, it is difficult to appreciate a hint of predictability following the rocketing pace of 2018, which saw readings of 56 percent in the months prior to Donald Trump taking office.  

Readings above 50 percent, of course, indicate an expansion, so the new reading certainly suggest that is still going on, albeit, at hardly any pace at all.  Indeed, looking more closely at the metrics, new orders, deliveries, inventories, and imports were all flat, for the most part, while customer inventories and order backlogs both saw shrinkage. 

As might be expected, the ISM has made it known that many businesses have expressed concerns about turbulence in trade between the United States and China. But with the potential addition of new tariffs on Mexican imports, concerns run far deeper today than in other still very recent months. Indeed, respondents of the survey have al, complained about tariffs on chemical products, machinery, chemical products, metal goods, and fossil fuels.