U.S. manufacturing contracted for the sixth consecutive month in August, with many factories pointing to the Trump administration’s sweeping tariffs as the main drag on activity. The Institute for Supply Management (ISM) reported that its manufacturing PMI rose slightly to 48.7 from 48.0 in July, but remained below the 50 threshold that signals contraction. Manufacturing makes up 10.2% of the economy. Several manufacturers painted a bleak picture, with some describing the current environment as “much worse than the Great Recession.” Tariffs, they said, have made it harder to produce goods domestically, with some transportation equipment makers warning that “there is absolutely no activity” and attributing the downturn “100 percent” to trade policies and uncertainty. Government data also showed factory construction spending dropped in July, down 6.7% year-on-year, underscoring the sector’s weakness. Adding to uncertainty, a U.S. appeals court ruled most of Trump’s tariffs illegal, threatening revenue streams that had supported fiscal plans .“I continue to see the broad economy generally and the manufacturing sector in particular as in a holding pattern until tariff-related uncertainty recedes,” said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets .While seven industries, including textiles and metals, reported growth, 10 others contracted—ranging from machinery and electronics to paper products. Some firms warned of “stagflation,” while others noted tariffs made “Made in the USA” even harder to achieve, forcing freezes in capital spending and hiring.
Factory Slowdown Sparks Fears of ‘Worse Than Great Recession’ Conditions
