Two closely-watched surveys on Tuesday showed a bigger-than-expected slowdown in the U.S. manufacturing sector in August — including one by the Institute for Supply Management that indicated the industry contracted for the first time since 2016.
Why it matters: The trade war, cited as a top concern among manufacturing firms, is viewed as a big factor driving the global economic slowdown. This is particularly true in the manufacturing sector, which has retreated significantly from its initial "Trump bump" after the election.
Details: The ISM survey's "purchasing managers’ index" had a reading of 49.1% last month, ending a 35-month period of expansion. Readings below 50% are considered contractions. Another survey by IHS Markit showed an index that reflects the health of the industry has slipped to its lowest level since 2009.
Amid fears that the U.S. may be on the brink of a recession, "manufacturing is likely to have again acted as a significant drag on the economy in the third quarter, dampening GDP growth," Chris Williamson, an economist at IHS Markit said in a release.
