US Manufacturing sector Remains in Contraction, Though August Index Shows Slight Enhancement
Washington – The US manufacturing sector continued to contract in August, with the ISM Manufacturing PMI rising slightly to 47.9 from 46.4 the previous month, remaining below the 50 threshold that separates expansion from contraction for the โขsixth consecutive month. The ongoing slump is largely attributed โto uncertainty surroundingโ tariffs and their impact on domestic production, according to industry experts.
The prolonged downturn signals continued challenges for the US economy, particularly within โคthe manufacturing base. A reading below 50 indicates a shrinking manufacturing sector, impacting jobs, investment, and overall economic growth.the situation is creatingโค hardship for manufacturers navigating increasedโค costs and disrupted supply chains, with potential ripple effects across related industries and consumer prices. The sector’s future hinges on resolution of trade disputes and a reduction in tariff-related uncertainty.
According to Stephen Stanley, chief economist at Santander US Capital Markets, the economy, especially manufacturing, will likely remain stagnant “until tariff-related uncertainty sets backwards.” Someโ manufacturers report that import dutiesโ are hindering domesticโ production, with companies producing electricalโค equipment, home appliances, and parts struggling with “manyโข parts [being] subject to customs duties, making it even more difficult to realize ‘made in the US.'”
The ISM report detailed โthat seven industries experienced expansion – including textiles, other manufacturing, and primary metals โค- while ten contracted, among โthem mechanical, electrical equipment, home appliances, parts, computers, and electronic equipment.Several transport manufacturers indicated the current conditions areโ more severe than those experienced during the 2007-09 global recession, directly blaming “current tariff policy and theโ uncertainty โit has created.”
Despite the overall sluggishness,increased spending related to โขartificial intelligence (AI) is partially offsetting the negative impacts of the tariffs.