Numbers released on Tuesday by the Institute for Supply Managements (ISM) showed that the country’s manufacturing activity fell to below ten-year lows in September, weighed down by the trade war between the U.S. and China as well as expectations for an economic slowdown on a global scale in the coming months. According to the ISM, its index of national factory activity fell 1.3 points to the lowest level since June 2009 when the Great Recession was ending.The reading came to 47.8 in September, indicating a contraction in the manufacturing sector. A reading of 42.9 by the ISM is the signal for a recession. September’s manufacturing data was the second consecutive month that the index fell below the important 50 level, and it was the sixth consecutive month of declines for the index. Analysts had expected September’s numbers to come in at 50.1.
According to the ISM, only three industries showed growth in September, down from nine in August. These industries are food, beverage and tobacco products, miscellaneous manufacturing, and chemical products. These three industries show the fewest gans by industry since 2013.
President Trump’s implementation of steep tariffs on previously cheap Chinese imports was meant to increase U.S. manufacturing by having more products and components produced locally, rather than having them shipped in from overseas. Instead, it appears that the tariffs have achieved an opposite objective, spooking consumers and reducing spending, which in turn reduces manufacturing. President Trump has blamed the Federal Reserve for the decline in manufacturing, claiming that the strong dollar is what caused the drop.
Global sock prices fell to one-month lows on the ISM’s data and increased fears that a global economic downturn is imminent. On Wall Street on Tuesday, the S&P 500 fell 1.23 percent to hit four-week lows. The Dow Jones Industrial Average closed down 1.28 percent and the NASDAQ slumped 1.13 percent. Asian markets were broadly lower on Wednesday as well, with South Korea’s Kospi easing 1.54 percent and Australia’s ASX 200 falling 1.29 percent as of 1:32 p.m. HK/SIN. Japan’s Nikkei 225 was down 0.50 percent, while both of China’s benchmark indexes were down near 1 percent.
Manufacturing numbers have also declined in China, the United Kingdom and the European Union in recent months,