Assembly product worker Ron Leenheer works on the final assembly of a water cooled transformer at RoMan Manufacturing in Grand Rapids, Michigan, December 12, 2018.
Rebecca Cook | Reuters
A gauge of U.S. manufacturing from the Institute for Supply Management showed the sector contracted to the lowest level in more than 10 years in September.
The ISM U.S. manufacturing Purchasing Managers’ Index fell to 47.8% in September, the lowest since June 2009, marking the second consecutive month of contraction. The reading is down from 49.1% in August. Any figure below 50% signals a contraction.
“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019. Overall, sentiment this month remains cautious regarding near-term growth,” Timothy Fiore, ISM chair, said in a statement.
Consumption, measured by the production and employment indexes, contracted at faster rates, primarily driven by a lack of demand, ISM data showed. New orders, backlog, raw materials inventories exports and imports also contracted across the board last month, according to ISM.
The continued weakness 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 improvement in employment and activity over the past few years.
The sector contracted for the first time in more than three years in August, ending a 35-month expansion period where the PMI averaged 56.5%, according to ISM.
This is a developing story. Check back for updates.
