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US factory gauge slumps to six-month low amid trade war
[WASHINGTON] A gauge of US manufacturing fell by more than forecast to a six-month low, as orders and hiring cooled amid escalating trade tensions with China, data from the Institute for Supply Management showed Thursday.
The report may add to concerns that President Donald Trump's trade war with China is starting to inflict more pain on manufacturing even as the industry continues to expand. The export-orders gauge fell for the third time in four months, while new orders decelerated for the fourth month in five.
The data follow other reports this week showing manufacturing in some of Asia's most export-driven economies softened in October, highlighting spillovers from the trade spat. At the same time, US stocks rallied Thursday after Mr Trump said he had a productive conversation with Chinese President Xi Jinping on trade.
Elevated price pressures and a pickup in measures of backlogs and supplier deliveries show lingering supply-chain bottlenecks. Disruptions and data volatility related to major storms in September and October may have played a role. Another potential headwind is the stronger US dollar, which has rallied sharply in the past six months.
Some of the results may reflect an unwinding of gains from previous months when manufacturers were rushing to purchase materials and export their products ahead of US tariffs and counter-levies by China. Mr Trump has threatened to raise the tariffs further and on more products.
Analysts are also monitoring factory reports to assess whether the tax-cut-driven boost to business investment may be fading. Figures last week showed corporate spending on equipment cooled in the third quarter to the slowest pace of gains since 2016. Meanwhile, the job market remains solid, and the October jobs report due Friday is projected to show manufacturing payrolls climbed.