{"id":394336,"date":"2025-09-03T10:42:15","date_gmt":"2025-09-03T10:42:15","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/394336\/"},"modified":"2025-09-03T10:42:15","modified_gmt":"2025-09-03T10:42:15","slug":"u-s-manufacturing-contracts-for-sixth-straight-month-over-tariff-fallout","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/394336\/","title":{"rendered":"U.S. manufacturing contracts for sixth straight month over tariff fallout"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Some manufacturers say sweeping import duties were making it difficult to manufacture goods in the United States.TAYLOR GLASCOCK\/The New York Times News Service<\/p>\n

U.S. manufacturing contracted for a sixth straight month in August as factories dealt with the fallout from the Trump administration\u2019s import tariffs, with some manufacturers describing the current business environment as \u201cmuch worse than the Great Recession.\u201d<\/p>\n

The Institute for Supply Management (ISM) survey on Tuesday also showed some manufacturers complaining that the sweeping import duties were making it difficult to manufacture goods in the United States. President Donald Trump has defended his protectionist trade policy, which has raised the nation\u2019s average tariff rate to the highest in a century, as necessary to revive a long-declining U.S. industrial base.<\/p>\n

That was reinforced by government data showing spending on the construction of factories dropped in July and was down 6.7 per cent from a year ago. A U.S. appeals court ruled last Friday that most of Trump\u2019s tariffs were illegal, adding more uncertainty for businesses.<\/p>\n

\u201cI continue to see the broad economy generally and the manufacturing sector in particular as in a holding pattern until tariff-related uncertainty recedes,\u201d said Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets.<\/p>\n

Canada\u2019s tariff revenue surges \u2013 but nowhere close to Ottawa\u2019s projections<\/a><\/p>\n

The ISM said its manufacturing PMI edged up to 48.7 last month from 48.0 in July. A PMI reading below 50 indicates contraction in manufacturing, which accounts for 10.2 per cent of the economy. Economists polled by Reuters had forecast the PMI would rise to 49.0.<\/p>\n

Seven industries, including textile mills, miscellaneous manufacturing and primary metals, reported growth last month. Among the 10 industries reporting contraction were makers of paper products, machinery, electrical equipment, appliances and components as well as computer and electronic products.<\/p>\n

Tariffs continued to dominate commentary from manufacturers. Some makers of transportation equipment said conditions were worse than the 2007-09 recession, adding \u201cthere is absolutely no activity\u201d and \u201cthis is 100 percent attributable to current tariff policy and the uncertainty it has created.\u201d Some viewed the conditions as consistent with \u201cstagflation.\u201d<\/p>\n

Some electrical equipment, appliances and components producers complained that \u201c\u2018made in the USA\u2019 has become even more difficult due to tariffs on many components.\u201d They said the \u201cadministration wants manufacturing jobs in the U.S., but we are losing higher-skilled and higher-paying roles.\u201d Others reported that because of the lack of \u201cstability in trade and economics, capital expenditures spending and hiring are frozen.\u201d<\/p>\n

Manufacturers of computer and electronic products said \u201ctariffs continue to wreak havoc on planning and scheduling activities,\u201d adding that \u201cplans to bring production back into (the) U.S. are impacted by higher material costs, making it more difficult to justify the return.\u201d<\/p>\n

Food, beverage and tobacco products manufacturers warned that everything made of organic sugar was \u201cabout to get significantly more expensive\u201d because of a 50 per cent tariff on imports from Brazil and the U.S. Department of Agriculture\u2019s elimination of the specialty sugar quota.<\/p>\n

Stocks on Wall Street were trading lower as investors worried over the appeals court ruling on the legality of tariffs. The dollar advanced against a basket of currencies. U.S. Treasury yields rose.<\/p>\n

The ISM survey\u2019s forward-looking new orders sub-index increased to 51.4 after contracting for six consecutive months.<\/p>\n

Nonetheless, ISM Manufacturing Business Survey Committee Chair Susan Spence said that for every positive comment about new orders there were \u201c2.5 comments expressing concern about near-term demand, primarily driven by tariff costs and uncertainty.\u201d The survey\u2019s production gauge fell to 47.8 from 51.4 in the prior month.<\/p>\n

With production declining, factory employment remained subdued, with the ISM noting that \u201clayoffs and not filling open positions remain the main head-count management strategies.\u201d<\/p>\n

\u201cThe grim hiring picture for manufacturing suggests companies have little confidence that a sustained improvement in demand lies around the corner,\u201d said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.<\/p>\n

Suppliers took a bit longer to deliver materials to factories last month. The ISM survey\u2019s supplier deliveries index increased to 51.3 from 49.3 in July. A reading above 50 indicates slower deliveries.<\/p>\n

Lengthening delivery times meant prices paid by factories for inputs remained elevated. The survey\u2019s prices paid measure slipped to a still-high 63.7 from 64.8 in July. The high reading supports economists\u2019 contention that goods prices will accelerate in the second half of 2025.<\/p>\n

Tariffs have been slow to pass through to higher inflation, with economists arguing that businesses are still selling merchandise accumulated before the import duties kicked in.<\/p>\n

Businesses also have been absorbing some of the tariff-related costs. But inventories were drawn down in the second quarter and companies have warned tariffs are raising their costs, which economists expect will eventually be passed on to consumers.<\/p>\n

It is, however, not all doom and gloom for manufacturing.<\/p>\n

Businesses have been boosting spending on AI products, which is helping to offset some of the drag from import duties. Spending on intellectual property products grew at its fastest pace in four years in the second quarter, while investment in equipment was strong.<\/p>\n

Economists expect the AI spending spree to continue, with factories also likely to get a boost from accelerated depreciation allowances on investments in Trump\u2019s tax and spending bill.<\/p>\n

\u201cTax incentives that start in 2026 may help to boost investment later in 2025 and into 2026, but for now most producers remain in wait-and-see mode,\u201d said Ben Ayers, senior economist at Nationwide.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Some manufacturers say sweeping import duties were making it difficult to manufacture goods…\n","protected":false},"author":2,"featured_media":394337,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5311],"tags":[6934,6925,6935,1500,6918,6936,943,6917,6930,6931,6927,6919,6916,1700,2266,728,6929,6923,6946,6920,6921,1234,6926,388,3611,6607,603,6941,6942,6944,6939,6943,6937,6940,6922,6932,6933,285,3027,6938,6924,53,183,6928,49,978,727,659,263,6945],"class_list":{"0":"post-394336","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-united-states","8":"tag-alberta","9":"tag-arts-news","10":"tag-bc","11":"tag-breaking-news","12":"tag-breaking-news-video","13":"tag-british-columbia","14":"tag-canada","15":"tag-canada-news","16":"tag-canada-sports","17":"tag-canada-sports-news","18":"tag-canada-trafficcanada-weather","19":"tag-canadian-breaking-news","20":"tag-canadian-news","21":"tag-economy","22":"tag-education","23":"tag-environment","24":"tag-federal-government","25":"tag-foreign-news","26":"tag-globe-and-mail","27":"tag-globe-and-mail-breaking-news","28":"tag-globe-and-mail-canada-news","29":"tag-government","30":"tag-life-news","31":"tag-lifestyle","32":"tag-local-news","33":"tag-manitoba","34":"tag-national-news","35":"tag-new-brunswick","36":"tag-newfoundland-and-labrador","37":"tag-northwest-territories","38":"tag-nova-scotia","39":"tag-nunavut","40":"tag-ontario","41":"tag-pei","42":"tag-photos","43":"tag-political-news","44":"tag-political-opinion","45":"tag-politics","46":"tag-politics-news","47":"tag-quebec","48":"tag-sports-news","49":"tag-technology","50":"tag-travel","51":"tag-trudeau","52":"tag-united-states","53":"tag-us","54":"tag-us-news","55":"tag-usa","56":"tag-world-news","57":"tag-yukon"},"share_on_mastodon":{"url":"","error":"Validation failed: Text character limit of 500 exceeded"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/394336","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=394336"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/394336\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/394337"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=394336"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=394336"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=394336"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}