U.S. manufacturing contracted in August for the first time in nearly a decade, the most recent indicator of the effect President Trump’s protracted trade war with China is having on the economy.
In August, the U.S. manufacturing purchasing managers’ index, which tracks the manufacturing sector, registered 49.9, a drop from 50.4 last month, according to IHS Markit. The latest figure is below the 50.0 threshold between expansion and contraction for the first time since September 2009.
New business to American manufacturers in August also fell for the second time in the past four months, according to the research and analytics firm. The diminished demand for new orders was the sharpest downturn in 10 years.
“The most concerning aspect of the latest data is a slowdown in new business growth to its weakest in a decade, driven by a sharp loss of momentum across the service sector,” Tim Moore, economics associate director at IHS Markit, said. “Manufacturing companies continued to feel the impact of slowing global economic conditions.”
The data from the August survey, he said, “provides a clear signal that economic growth has continued to soften in the third quarter.”
Trump vowed to breathe life into American manufacturing and has touted the U.S. economy as the strongest in the world. But analysts fear the U.S. could be heading toward an economic downturn, a fear heightened last week after the bond market flashed a warning sign about a potential recession.
The manufacturing sector has also been under pressure from the president’s ongoing trade war with China, which currently shows no immediate signs of ending.
