Timothy Fiore, head of ISM’s Manufacturing
Business Survey Committee, pointed to the 2.3
percentage point drop in a measure of new
export orders, its lowest level since March 2009.
The ISM survey also includes comments from
its members, and three of the 10 manufacturers
quoted said that the tariffs are hurting their
business. None blamed a strong dollar or the
Fed. Most economists also point to the trade
fight for manufacturers’ problems.
“Simmering trade tension is the obvious
culprit for the manufacturing weakness,”
said Eric Winograd, senior U.S. economist at
AllianceBernstein.
“The trade war is wreaking havoc, to the point
where the incipient upturn in manufacturing
in China is not transmitting, at all, to the U.S.,”
said Ian Shepherdson, chief economist at
Pantheon Macroeconomics.
Weakening production is spilling over to hurt the
American workforce. The ISM survey indicates
that more factory owners are considering
cutting jobs than the prior month. Employment
contracted at a faster rate in September. One
survey respondent said that lower demand for
products ordered had prompted the company to
cut 10% of its workforce.
Some economists also suggested that the
ongoing union worker strike at General
Motors could have played a role in a slower
automotive market.
“That strike has now begun to affect production
at suppliers too,” said Paul Ashworth, chief US
economist at Capital Economics. When the
strike ends, we would expect the manufacturing
sector surveys to rebound too.”