Jan 3, 2020

U.S. manufacturing activity hits worst level since 2009

Photo: Scott Olson/Getty Images

The Institute of Supply Management's index of manufacturing activity released Friday hit its lowest level since the end of the Great Recession in December.

Why it matters: It shows worsening conditions for the U.S. manufacturing sector, which has been in contraction for five straight months, and reignites concerns about the trade war's impact on the economy. Stocks, already in the red after a U.S. airstrike killed a top Iranian general, fell near the lowest levels of the day following the release of the data.

By the numbers: The index came in at 47.2 in December — worse than the 49 economists expected — falling 0.9 points from the prior month's reading. (Any reading below 50 suggests the manufacturing sector is in contraction.)

  • Respondents to the survey, which manufacture goods in 18 different industries, noted sluggish demand for products, as well as suppliers passing tariff-related costs on to manufacturers.

The bottom line: "Global trade remains the most significant cross-industry issue, but there are signs that several industry sectors will improve as a result of the phase-one trade agreement between the U.S. and China," ISM chair Timothy Fiore said in a statement.

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Why U.S. manufacturing and services are moving further apart

Data: Institute for Supply Management; Chart: Axios Visuals

While U.S. manufacturing has fallen into its deepest hole in a decade, the all-important services sector keeps chugging along.

What's happening: The Institute for Supply Management's gauge of the U.S. services sector yesterday produced a reading solidly in expansionary territory and above expectations. That was a far cry from the company's manufacturing index, which last week hit its weakest level since June 2009.

Go deeperArrowJan 8, 2020

Fed manufacturing indexes jump in January

Data: FactSet; Chart: Naema Ahmed/Axios

The Richmond Fed's January manufacturing survey recorded its highest reading in almost a year and a half on Tuesday.

Why it matters: The survey is considered a potential leading indicator of overall manufacturing because it is released close to month-end and may offer clues on national manufacturing readings like those from ISM and IHS Markit.

Go deeperArrowJan 29, 2020

Manufacturing should bounce back in 2020

Illustration: Aïda Amer/Axios

Last year was one to forget for the world's manufacturers, as industry metrics declined to some of the lowest levels in years.

The state of play: Investors and industry insiders see the sector mounting a comeback in 2020 as the trade war and tariffs are expected to recede, global demand is expected to increase and companies begin to reroute their supply chains.

Go deeperArrowJan 15, 2020