The US manufacturing purchasing managers' index (PMI) fell below 50 for the first time since 2009, signaling that the ongoing trade war between the United States and China is taking its toll on the manufacturing sector, reports the Washington Post
(22 August, Marte). In July, the PMI stood at 50.4, but it dropped to 49.9 in August. The PMI score is based on the results of a survey given to manufacturers about production, output, orders, inventory, and pricing. When the PMI stands below 50, it means that the manufacturing sector is contracting. The decrease in the PMI between July and August mirrored a decrease in the sale of US exports, a sign that normally indicates manufacturers will reduce inventory, cut production, and even trim jobs. Mark Zandi, chief economist for Moody's Analytics, had a gloomy outlook on the state of manufacturing, suggesting that "[i]f manufacturing is not in a recession, it is pretty close." The troubles in the manufacturing sector could have wide-reaching effects in other industries. With shipping and distribution curtailed, the manufacturing slowdown could hurt transportation companies, warehouses, seaports, and airports. And if manufacturing workers receive pay cuts or get laid off, they will limit their personal spending, which could hurt retail.
From "Manufacturing Sector Contracted for the First Time Since 2009, Data Show"
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