Economy Trade

American Manufacturing May Be In Recession Now

Written by SK Ashby

Manufacturing activity declined by 0.2 percent during the month of July according to the Federal Reserve and now an initial reading of the purchasing managers index for the month of August shows that manufacturing has dropped below a level that indicates growth.

From CNBC:

The U.S. manufacturing PMI (purchasing managers index) was 49.9 in August, down from 50.4 in July and below the neutral 50.0 threshold for the first time since September 2009, according to IHS Markit.

Any reading below 50 signals a contraction. The survey is an initial reading for the month of August. The final figure will be released on Sep. 3.

“Manufacturing companies continued to feel the impact of slowing global economic conditions,” Tim Moore, economics associate director at Markit, said in a statement on Thursday. “August’s survey data provides a clear signal that economic growth has continued to soften in the third quarter.”

While manufacturing activity dropped into negative territory for the first time since 2009 according to this survey, perhaps more relevant is the fact that exports of goods manufactured in America have also fallen to their lowest level since 2009.

If the latter holds up once more comprehensive data becomes available at the end of the month, I think we can expect to see our trade deficit increase more than expected even while Trump imposes more tariffs on foreign goods. Exports have been falling faster than imports since Trump's trade war first began and the disparity may widen if American manufacturing contracts because Americans are still buying shit, just not American-made shit.

If manufacturing shrank in July and August, that would technically constitute a recession even if it's minor.