Electronics Industry Contracts; U.S. Factory Gauge Hits 10-Year Low

By Barbara Jorgensen, EPSNews

U.S. factory activity in September contracted for the second consecutive month to reach its lowest level since June 2009—the end of the last recession. The Institute for Supply Management’s leading manufacturing index, the PMI, registered 47.8 in September, a 1.3 percent drop from August. The demarcation line between expansion and contraction is 50.

Business confidence is eroding, according to the ISM, as trade issues continue to dog U.S. manufacturers. “One-third of our comments this month were tariff-related,” said Tim Fiore, chair of the ISM’s manufacturing survey committee, “and that’s only going to get worse. New tariffs are scheduled for Oct. 15 and Dec. 15. The possibility of a resolution [with China] is being diminished every day.”

The ISM polls thousands of U.S. manufacturers every month for its Report on Business. Only three of the 18 manufacturing sectors surveyed by the ISM expanded in September.

Electronics—one for the four largest segments tracked by the ISM — is also in contraction mode, said Fiore. New orders contracted strongly, he said, and employment levels fell. September was the second consecutive month that computer and electronics shipments outpaced new orders, a tech executive told the ISM. Two other big sectors, chemicals and transportation, are stabilizing, Fiore said.

 

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