video-banner
none

US MANUFACTURING TRUMPED

07-10-2019
by 
in 

The US manufacturing sector is in decline. The Institute of Supply Management's manufacturing index dropped to 47.8 in September, an unexpected fall from the already contracting figure of 49.1 recorded in August. Significantly, the figure is the lowest since June 2009 at the end of the Global Financial Crisis.

The decline shows every sign of continuing. The ISM survey reported that US machinery manufacturers spoke of softening demand and reduced backlogs, while food, beverage and tobacco producers said Chinese tariffs are hurting their businesses.

While the accelerating fall surprised analysts, even in the USA, there is near universal agreement on the main cause. "Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019," said Timothy Fiore, Chair of the ISM's Manufacturing Business Survey Committee.

The Trump administration’s trade war with China is now 15 months old, and it is manufacturing that has borne the brunt of the trade tariffs. Within the latest ISM data, export orders fell 2.3 points to a reading of 41.0 in September, the lowest since March 2009.

The news comes as an inconvenient truth to the US President, who came to power on a campaign to revitalise American manufacturing and bring back companies from off-shoring.

President Trump’s response to the news has been to blame the Federal Reserve for allowing the US dollar to become overvalued, Tweeting: “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.”

Nonetheless, while the trade war continues, global trade is likely to suffer all round.

The World Trade Organisation has now cut its forecast for growth in global trade this year by more than half and warns that further rounds of tariffs and retaliation, slowing economies and a disorderly Brexit could squeeze it even more.

The implications for Australian manufacturing are unclear. But it seems that manufacturers in the USA have most to lose.

 

 

 

Related news & editorials

  1. 04.10.2019
    04.10.2019
    by      In
    The St.George Bank Happy Dragon made a surprise and rather athletic appearance in Parramatta Park last month as part of the Coleman Greig Challenge. Inside the suit was none other than regular Industry Update contributor Matthew Kelly, Head of Manufacturing & Wholesale at St.George Bank.
    The... Read More
  2. 01.10.2019
    01.10.2019
    by      In
    Positive signs continued for the manufacturing sector in September, with the Ai Group’s Performance of Manufacturing Index rising 1.6 points to 54.7, continuing a sustained run of growth only spoiled by a negative blip at the time of the federal election.
    The underlying data provide mostly positive... Read More
  3. 11.09.2019
    11.09.2019
    by      In
    An opportunity has arisen to purchase a well-established Australian company with substantial experience, a strong reputation and ongoing contracts in materials handling, manufacturing and warehousing.
    The technology-led company is profitable, and has a consistent annual turnover in the region of $5... Read More
  4. 02.09.2019
    02.09.2019
    by      In
    Australian manufacturing continued to rally during August, with the Ai Group’s Performance of Manufacturing Index rising again by 1.8 points to reach 53.1. And the underlying data suggest that the recovery should not be short lived.
    According to Ai Group Chief Executive Innes Willox: "Stronger... Read More