Industry Continues to Suffer in September 2019 Manufacturing ISM® Report On Business®

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Just a few days into the fourth quarter and there’s already bad news coming down the pike. The September 2019 Manufacturing ISM® Report On Business® is out and with it, a stream of negative headlines about the manufacturing economy. The report doesn’t paint a good picture. Metrics are down across the board and industry sentiment continues growing anxious. The downturn heralded in August’s report has continued unabated.

The numbers are telling of recession

The overall PMI® fell from 49.1 to 47.8, deeper into contraction territory. Driving it down were faltering numbers across the board, including a substantial drop in exports (-2.3%) and a major bump in prices (3.7%). September also saw stark movement in production, which fell 2.2%. Employment (-1.1%), inventories (-3%), and order backlog (-1.2%) all fell. New orders, supplier deliveries, and customers’ inventories are all flat.

While the numbers themselves aren’t great to look at, their implications are what’s truly giving economists pause. September’s PMI is the lowest since June 2009, coming on the heels of six straight months of softening and the second consecutive month of contraction. Looking back at the past decade while observing current trends doesn’t paint a picture of confidence for the manufacturing economy.

Fears loom large in manufacturing

Until this point, industry sentiment has been lukewarm. Many industrialists planned for a cooling period and adjusted expectations accordingly. Current chatter indicates this recent two-month downturn may be harder and faster than initially anticipated, however.

“We have seen a reduction in sales orders and, therefore, a lower demand for products we order. We have also reduced our workforce by 10 %.” — Plastics & Rubber Products

“Business has been flat for us. Year-over-year growth has slowed dramatically.” — Miscellaneous Manufacturing

“General market is slowing even more than a normal fourth-quarter slowdown.” — Fabricated Metal Products

Those facing stagnation within their individual sectors are bracing themselves for worse still to come. Tariffs continue to surface in talks of supply chain and pricing, while employment remains a focal point in talks of a cooling general economy. Mainstream headlines aren’t making things better. The resounding voice of industry echoes a similar message: Rough times are ahead for manufacturing.

Broader implications for the U.S. economy

The current state of manufacturing is relatively isolated, and the broader U.S. economy continues to hum along. But for how long? Manufacturing has always been a pillar and a cornerstone of the greater economy. As it becomes an anchor, how long before it pulls the rest of the markets down with it?

Thankfully, manufacturing isn’t the majority of the greater economy it once was ― that title now belongs to the services sector. While still a significant part of the larger markets, there’s confidence that a manufacturing recession won’t be the straw that breaks the camel’s back. General recession may be on the horizon, but manufacturing recession won’t be the only thing that triggers it.

Manufacturing is in a bind, no doubt. It’s likely to get worse before it gets better, which means rough months (or years) ahead of manufacturing. Whether or not general recession follows, it’s important for manufacturers to tighten their belts and realize their reality. The time to innovate and streamline is here.

Now’s the time to tighten your budgeting belt and make smart decisions about factory operations. Sometimes, that means forming a new partnership – one with built-in value. Turn to the professionals at Global Electronic Services. Contact us for all your industrial electronic, servo motor, AC and DC motor, hydraulic, and pneumatic needs — and don’t forget to like and follow us on Facebook!