The Institute for Supply Management’s PMI Index fell -1.3 points to 47.8, its lowest reading in over ten years (June 2009), indicating that the rate of U.S. manufacturing contraction is increasing (a reading below 50.0 indicates contraction). For the second month in a row, the PMI indicated contraction, surprising analysts who expected a rebound to 50.1, and extending its downward trend to six consecutive months. With the exception of Supplier Deliveries, all the sub-indices also indicated contraction, many at an increasing rate, including Production, Employment, Inventories, Backlog and New Export Orders.
“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019,” according to ISM’s press release. Comments by some of the survey respondents concurred:
- “Economy seems to be softening. The tariffs have caused much confusion in the industry.” (Electrical Equipment, Appliances & Components)
- “Chinese tariffs going up are hurting our business.” (Food, Beverage & Tobacco Products)
- “Continued softening in the global automotive market. Trade-war impacts also have localized effects, particularly in select export markets.” (Chemical Products)