NextFin news, US manufacturing continued to shrink in August, marking the sixth consecutive month of contraction, according to a report released on Tuesday in the United States.
The industrial manufacturing sector's ongoing decline is attributed largely to the tariffs implemented under the Trump administration, which have increased costs and disrupted supply chains across the country.
Economist Noah Yosif stated, "The manufacturing sector is very acutely exposed to the direct and indirect effects of tariffs." This sentiment was echoed by industry leaders, including Mario Cordero, CEO of the Port of Long Beach, who described the situation as one of "radical uncertainty" and expressed concerns about rising consumer prices.
The Institute for Supply Management (ISM) reported its manufacturing Purchasing Managers’ Index (PMI) at 48.7 in August, slightly up from 48.0 in July but still below the 50-point threshold that indicates expansion. This data reflects contraction in manufacturing, which accounts for over 10 percent of the US economy.
Manufacturers across various industries, including computer and electronic products, transportation equipment, and electrical appliances, reported difficulties due to tariffs. Some described the current business environment as "much worse than the Great Recession," with capital expenditures and hiring frozen amid trade and economic instability.
President Donald Trump defended the tariffs as necessary to revive the US industrial base, despite a recent federal appeals court ruling that many of these tariffs are unconstitutional, a decision now pending before the Supreme Court.
Stephen Stanley, chief US economist at Santander US Capital Markets, commented on the situation, saying, "I continue to see the broad economy generally and the manufacturing sector in particular as in a holding pattern until tariff-related uncertainty recedes."
The report also highlighted that while tariffs have yet to fully pass through to consumer prices, manufacturers are facing increased costs for imported materials and higher borrowing costs, which are expected to eventually impact retail prices.
Overall, the manufacturing sector in the US is grappling with the direct and indirect consequences of tariff policies, leading to sustained contraction and uncertainty about the future economic outlook.
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