Trade Sanctions Driving Down U.S. Manufacturing – FD Mania

Reuters reports that US manufacturing. UU. It fell to a minimum of more than ten years in September. Why? According to Reuters, the commercial tensions of the month weighed on exports, which increased market fears of a sharp slowdown in economic growth in the third quarter.

Quote from the Institute for Supply Management (ISM) Tuesday (October 1, 2019) / "The fading economy has been attributed to the 15-month trade war of the Trump administration with China, which has undermined business confidence and undermined manufacturing. "

Manufacturing has been the worst part of trade tariffs, which according to the White House are necessary to protect industries from what it says is unfair foreign competition. President Donald Trump blames the Federal Reserve, in particular, President Jerome Powell, for the discomfort of the manufacturing sector.

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“As I predicted, Jay Powell and the Federal Reserve have allowed the dollar to become so strong, especially in relation to & # 39; everyone; other currencies, which our manufacturers are being negatively affected, "Trump tweeted shortly after the ISM survey was published." Fed rate too high. They are their own worst enemies, they have no idea. Pathetic! "said the President.

1.3 points | The ISM index of national manufacturing activity fell to a reading of 47.8 last month, the lowest level since June 2009, when the Great Recession was ending.

50 | A reading below 50 indicates a contraction in the manufacturing sector, which accounts for approximately 11% of the US economy.

"This is serious," said Torsten Sløk, chief economist at Deutsche Bank Securities in New York. "There is no end in sight for this slowdown, the risk of recession is real."

The fall in manufacturing could force the Fed to cut interest rates again in October. The Fed cut the cups of interest last month after reducing loan costs in July for the first time since 2008 to keep expanding, now in its eleventh year, on the way.

The recession in manufacturing in the United States reflects similar patterns in the euro area, Japan, the United Kingdom and China.

The World Trade Organization reduced its forecast of world trade growth this year by more than half on Tuesday and warned new rounds of tariffs and reprisals, deceleration of economies and a disorderly Brexit could squeeze it further.

The ISM said that manufacturers' comments "reflect a continuous decline in business confidence," and also noted that "world trade remains the most important problem."

Export orders plummet

One measure The number of export orders fell 2.3 points to 41.0 in September, the weakest since March 2009.

The factory employment rate of the survey fell to 46.3 last month, the lowest in more than 3 and a half years, from 47.4 in August ust.

Factory payrolls contracted in September after increasing by about 3,000 jobs in August.

The ISM said that only three industries: diverse manufacturing, food, beverages and tobacco products and chemicals reported growth last month.

"… trade tariffs designed to bring to factories abroad are actually closing production at existing plants here in the United States," said Chris Rupkey, chief economist at MUFG in New York.

Photos | GettyImages

source smallbusiness .com

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