The Institute for Supply Management’s August 2019 Manufacturing ISM® Report On Business® published last week reflects the manufacturing industry is heading into a recession. The ISM’s many metrics, including the PMI, are all seen as leading indicators of the manufacturing industry.
Comments from manufacturers who participated in their monthly survey reflect growing uncertainty over the economy, more constrained supply chains and fears over orders slowing down last month. ISM makes the following dashboard available every month comparing Index values, percentage change, and direction. Nine of the 11 indices are contracting as of the latest ISM survey.
Manufacturers who are the most negatively impacted by the trade wars are redesigning and re-routing their supply chains to eliminate tariffs, so they don‘t have to raise their prices. Lack of confidence in the economic situation and trade forced new export orders to contract last month; further sign manufacturers are busily redesigning their supply chains in response to tariffs. In summary, the manufacturers interviewed for the ISM, and their activity predicts that economic turbulence, uncertainty, and trade wars are the new normal. Manufacturers need to become more resilient and self-directed with better data to keep growing in the new reality of economic and trade uncertainty.