Bad news greeted analysts on Tuesday after a recent report revealed that the manufacturing industry in the U.S. is dropping, amid bullish predictions of its slow but steady expansion.
Manufacturing Business Survey from the Institute for Supply Management revealed that manufacturing unexpectedly dropped to 49.1 in August – the lowest in the past three years. Experts say that it is important to note that when the survey drops below the threshold of 50, it becomes an indication that the manufacturing market is shrinking.
Many economists and trade experts believe that it is the trade war between the U.S. and China that majorly contributed to the unexpected drop. They urged President Trump to put an end to the trade war because it’s already taking a toll to the American economy and are already affecting businesses.
“Manufacturing is on the front line of the trade war, and it’s getting creamed,” said Mark Zandi, chief economist at Moody’s Analytics. “The dark irony is the trade war was supposed to help to manufacture, but instead it’s pushed them underwater.”
While there is a slight relief as imports have slightly contracted, the exports have widely dropped, the report reveals. This tells you that the trade war isn’t working,” said Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics.
“Manufacturing is often a bellwether,” Kirkegaard said. “It’s very rare that you have downturns that begin elsewhere outside of manufacturing.”
Currently, manufacturing factors in a little over 10 percent of G.D.P., which means that a recession in the industry would less likely trigger a full-blown economic drop, analysts say. However, as the numbers in other industries, coupled with the money hoarding behavior of the rich, as well as the intense tariffication tit-and-tat of China and the U.S., the future isn’t that bright at all, economists warned.
