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Sharp US Manufacturing Contraction Stokes Fears Of A Global Economic Recession
President Donald Trump speaks to auto workers at the American Center for Mobility discussing his priorities of improving conditions to bolster the manufacturing industry and reduce the outsourcing of American jobs. (Bill Pugliano/Getty Images)
Impacted by the adverse effect of President Donald Trump’s trade war on China, US factory activity contracted for the second straight month in September witnessing its largest contraction in more than ten years.
The report, released by the Institute for Supply Management, revealed that its manufacturing index came in at 47.8 percent, the lowest rate since June 2009 and the second consecutive negative quarter for U.S. manufacturing.
Readings below 50 indicate contraction, while those above signify expansion. The August result marked the first drop in three years.
The released data, which also showed new exports at a 10 year low, prompted fears that the U.S domestic manufacturing sector is struggling to stay afloat amidst an escalating trade war with China.
The World Trade Organization (WTO) also projected numbers that pointed to bleak prospects for trade growth this year. WTO also pointed out that “escalating trade tensions” for the its forecast that world trade volumes growing only 1.2 per cent this year.
Similar surveys of purchasing managers in Europe and Asia released on Tuesday pointed to deepening declines in factory activity in September has raised the spectre of a global economic downturn.
The release of string of worrying numbers prompted a dramatic plunge in the stock market with the Dow Jones Industrial Average fell by more than 200 points in Tuesday afternoon trading.
Trump blamed the Federal Reserve and its chairman Jay Powell for US manufacturing woes.
“As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected,” he tweeted.
“Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!”
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