Manufacturing sector contracts 4th month in a row, in recession

  • The Institute of Supply Chain Management released its report on November US manufacturing sector data.
  • The index fell to 48.1, indicating an acceleration of contraction in the sector.
  • This is the fourth month in a row the index has been in contraction, indicating a sector recession.

The Institute of Supply Chain Management (ISM) released its November US manufacturing sector data and the picture is bleak. The ISM measures the sectors data using an index. Anything below an index number of 50 indicates contraction in the sector. The November data came in at 48.1, lower than October’s 48.3.

November marks the fourth month in a row the index has been below 50. The formal definition of a recession is generally two quarters in a row of contraction.

“Global trade remains the most significant cross-industry issue,” said Timothy Fiore, chair of the ISM’s manufacturing business survey committee. The Trump administration’s tariffs and broader trade war have had a clear negative affect on the manufacturing sector, despite the President’s promises to expand output and employment.

Other indicators added to the negative picture painted by the report. The new orders index dipped to 47.2 from 49.1 in October, reaching the lowest level since April 2009. Inventories dropped to a 42-month low, and employment fell to 46.3.

The Dow Jones Industrial Average reacted negatively to the report, closing down 260 points by the end of trading.

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