US factory activity dropped to its lowest level in over a decade last month amid heightened trade conflicts and fears of a global slowdown in economic growth.
The Institute for Supply Management said on Tuesday that its index of national factory activity dropped to 47.8% in September, down from 49.1% in August. Any reading below 50% signals contraction. T
he September reading is the lowest the index has been since June 2009.
According to ISM data, the new export orders index was 41%, down from 43.3% in August. The Production Index dropped 2.2 points in September to 47.3% while the Employment Index declined 1.1 points to 46.3%.
Of the 18 manufacturing industries, only three reported growth.
Timothy Fiore, ISM chair, said in a statement:
“Comments from the panel reflect a continuing decrease in business confidence. September was the second consecutive month of PMI contraction, at a faster rate compared to August.”
“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,” Fiore added.
Some economists are warning that there is now a real risk of a recession – a period of significant decline in economic activity.
According to CNBC, Torsten Slok, chief economist at Deutsche Bank said in a note: “There is no end in sight to this slowdown, the recession risk is real.”
US President Donald Trump blamed the manufacturing weakness on the Federal Reserve for allowing the US dollar to “get so strong”.
As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!
— Donald J. Trump (@realDonaldTrump) October 1, 2019
