U.S. Manufacturing Activity Shrinks For First Time In Three Years

(JIM YOUNG/AFP/Getty Images)

Paulina Likos Contributor
Font Size:

Despite 124 months of consecutive growth for the overall economy, U.S. manufacturing activity declined for the first time in three years last month, according to the Institute for Supply Management (ISM) Report.

The August 2019 Manufacturing ISM Report On Business was issued Tuesday by the Chairman of ISM, Timothy R. Fiore and showed the Purchasing Managers’ Index or PMI, which serves as an indicator of economic health in the manufacturing sector, for August stood at 49.1, the lowest reading since January 2016, which was registered at 48. (RELATED: Trump Says He ‘Found The Magic Wand’ After Best Job Growth For US Manufacturing Since 1997)

The report also showed percentage point changes from July to August. This one month trending data showed declines in other areas of the economy including new orders, employment and new export orders for the month of August.

The report explained, “A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.”

However, the report went on to say that a PMI exceeding 42.9 percent typically means the economy is growing. The PMI of 49.1 for August indicated overall economic growth for the 124th consecutive month. (RELATED: Trump: US-China Trade Talks Are ‘Back On Track’ After G20 Meeting)

Comments from the panel showed there to be a “decline in business confidence.”

“Respondents expressed slightly more concern about U.S.-China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders. Respondents continued to note supply chain adjustments as a result of moving manufacturing from China. Overall, sentiment this month declined and reached its lowest level in 2019,” said Fiore.