U.S. manufacturing index ticks up, but remains in contraction territory

Keywords Manufacturing

U.S. manufacturing output showed some improvement in October, but remained in negative territory for the third straight month as trade tensions and a slowing global economy took a toll on American factories.

The Institute for Supply Management, an association of purchasing managers, said Friday that its manufacturing index blipped up to 48.3 last month from 47.8 in September, the first uptick since March. But anything below 50 signals a contraction, and manufacturing has been on a three-month losing streak.

New orders, production and hiring all contracted. But export orders increased in October after a September decline.

Twelve of 18 manufacturing industries contracted in October, led by primary metals, clothing and textile mills.

President Donald Trump’s trade war with China and conflicts with other trading partners have created uncertainty for manufacturers. They have delayed purchases and investments because they don’t know whether or when Trump will lift taxes on imports and which countries he might target next.

“A business owner can’t make decisions fast enough to keep up,” said Kip Eideberg, senior vice president of government and industry relations at the Association of Equipment Manufacturers.

Toymaker Hasbro, for instance, last month reported that the trade war is wreaking havoc on its supply chain and confusing its customers.

Also Friday, the Labor Department reported that the United States shed manufacturing 41,000 jobs in October—though that loss reflected a strike at General Motors.

Despite the manufacturing slump, the U.S. economy continues to grow, supported by a relatively healthy services sector and healthy consumer spending. Services firms added 157,00 jobs last month.

But the uncertainty over trade has kept manufacturers from prospering despite a relatively healthy economy and Trump’s 2017 tax cuts. “Overall, this should be a time when manufacturers are hiring people and making investments,” Eideberg said. “And they’re just not doing it.”

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