The economy added 128,000 private sector jobs in October according to the Bureau of Labor Statistics' initial estimates and while that is more than economists expected, it was not reflected by corresponding strength in manufacturing.
The manufacturing sector entered recession in September after declining for two straight months and that recession continued in October according to the purchasing manager's index.
The purchasing manufacturing index from the Institute for Supply Management came in at 48.3% last month, compared with a 47.8% reading in September. But it was below economists’ expectations of 49.1%. A number below 50% represents a contraction in the industry. A six-week strike of General Motors workers during the month might have muddied the reading.
The sector showed its first contraction in a few years in August, ending a 35-month expansion period where the PMI averaged 56.5%, according to ISM. The manufacturing gauge had its lowest reading since June 2009 in September as exports dived amid the escalated trade war.
There was little reason to think manufacturing would recover while Trump's trade war is ongoing and no reason to think it will recover even if Trump signs his "greatest and biggest deal ever" with Chinese President Xi Jinping later this month.
Manufacturing won't recover even if Trump signs his 'greatest deal' because his deal, as it theoretically exists, will not roll back any of his tariffs or China's retaliatory tariffs that are currently on the books.
Trump's initial tariffs on foreign metal, his tariffs on a wide range of industrial goods imported from China, and retaliatory tariffs imposed on American goods from many countries have pushed the manufacturing sector into recession and there's no relief from any of it currently in sight. Trump just recently imposed tariffs on European goods and we have yet to see how the European Union will retaliate for that.
American and European officials have engaged in some limited talks concerning subsidies for Airbus and Boeing according to CNBC, but I feel like that's barely worth mentioning. The European Union may be trying to negotiate in good faith, but they will find none with a Trump who feels empowered by the World Trade Organization's ruling in favor of his tariffs.