We just got the latest sign of a downturn in US manufacturing — the opposite of what Trump's trade wars were supposed to accomplish

Business Insider Finance 2 weeks ago
  • New orders for American-made products and equipment investment slumped more than expected in September.
  • US manufacturing slipped into a recession this year as a trade dispute between the Trump administration and China piled onto pressure in the sector.
  • The manufacturing sector accounts for 11% of gross domestic product but is deeply intertwined with broader parts of the economy.
  • Visit Business Insider's homepage for more stories.

New orders for American-made products and equipment investment slumped more than expected in September, offering the latest signs that trade tensions have added to troubles in the manufacturing sector. 

The Commerce Department said Monday factory goods orders fell 0.6% in September after a 0.1% dip the previous month. Economists polled by Reuters had predicted the measure would fall 0.5%. Shipments also declined, and unfilled orders were unchanged. 

US manufacturing slipped into a recession this year as an economic standoff between the Trump administration and China piled onto pressure in the sector, which has also grappled with a global slowdown in factory activity. President Donald Trump has argued the dispute would ultimately help the manufacturing sector through fairer trade policies. 

But with steep tariffs on thousands of products traded between the largest economies, businesses have faced higher prices and struggled to make business plans. The two sides are laboring to reach the first part of a deal to defuse tensions before a critical round of planned import taxes takes effect in December. 

"The trade war and the uncertainty tax have caused a significant and large downward drag on overall domestic industrial activity," said Joe Brusuelas, the chief economist at RSM. "The risks around the direction of trade policy have caused large declines in fixed business investment and is one of the primary reasons why the Trump administration is quickly looking to strike a deal."

The Commerce Department also said a measure of business investment plans, September shipments of non-defense capital goods, declined 0.6%. That figure was a steeper drop than reported last month and came after a gross domestic product report last week showed business investment fell by the most in more than three years in the third quarter. 

The manufacturing sector accounts for 11% of gross domestic product but is deeply intertwined with broader parts of the economy.


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