US manufacturing survey shows worst reading in a decade

US manufacturing survey shows worst reading in a decade

  • The ISM U.S. manufacturing purchasing managers’ index came in at 47.8% in September, the lowest since June 2009.
  • This marks the second consecutive month of contraction.
  • The new export orders index tanked to only 41%, the lowest level since March 2009.

A gauge of U.S. manufacturing showed the lowest reading in more than 10 years in September as exports dived amid the escalated trade war. Any reading below 50% is considered a contraction, with Tuesday’s figure marking the lowest reading since June 2009. June 2009, which also happens to mark the technical last month of the Great Recession, is not a month to which you want to see any part of the economy reverting.

The U.S. manufacturing purchasing managers’ index from the Institute for Supply Management came in at 47.8% in September, marking the second consecutive month of contraction. The new export orders index was only 41%, the lowest level since March 2009, down from the August reading of 43.3%, ISM data showed.

The ISM employment gauge for the sector showed the lowest reading since January 2016, primarily driven by a lack of demand. New orders, backlog, raw materials, inventories, exports and imports also contracted across the board last month, ISM data showed.

“There is no end in sight to this slowdown, the recession risk is real,” Torsten Slok, chief economist at Deutsche Bank said in a note Tuesday after the report.

The deeper contraction in the manufacturing sector is the latest sign that the escalated trade war between the U.S. and China is taking a big bite from the economy. Manufacturing was once considered a big winner under the Trump administration with improvements in employment and activity over the past few years.

Source: CNBC