(CNBC 5/29/19) The U.S. manufacturing PMI (purchasing managers index) was 50.6 in May, the lowest level since September 2009, according to results from financial data firm IHS Markit released Thursday. “Growth of business activity slowed sharply in May as trade war worries and increased uncertainty dealt a further blow to order book growth and business confidence,” said Chris Williamson, Markit’s chief business economist.
U.S. overall business activity growth also faltered to a three-year low as the seasonally adjusted IHS Markit Flash U.S. Composite PMI Output Index dropped to 50.9 in May, indicating the slowest expansion since May 2016.
“The slowdown has been led by manufacturing, but shows increasing signs of spreading to services … Trade wars remained top of the list of concerns among manufacturers, alongside signs of slower sales and weaker economic growth both at home and in key export markets,” Williamson said.
Trade tensions between the world’s two largest economies intensified this month after both sides slapped tit-for-tat tariffs on billions of dollars worth of each other’s goods. President Donald Trump also toughened his stance on trade this week by blacklisting Chinese telecom giant Huawei, halting its ability to buy American-made parts and components.
A rating over 50% still shows growth in the economy. An expanding economy. Purchasing managers are purchasing.
Not quite. Read the article.
Wall Street has known for months the economy is slowing markedly. It is not yet recessionary, but the growth rate has dropped well below the post-2009 trend line. This is less about trade and mostly because of domestic factors such as sluggish wage growth, inventory buildup, and tighter bank lending in the face of deteriorating loan quality and rising default rates. It’s clear that consumers are struggling, and that’s trickling through the whole economy. Higher prices from tariffs will exacerbate this problem, but didn’t cause it. It was more or less baked into the cake even without Trump’s trade wars.