US Manufacturing Down Trend Continues

Photo: Mod-Pac Corporation , Buffalo, NY

Photo: Mod-Pac Corporation , Buffalo, NY

The Institute for Supply Management’s PMI Index fell to 52.1 in May, a 2 1/2-year low and below market expectations, continuing a downward trend since reaching a 14-year high last August. In the intervening 9 months, the Index has fallen 8.7 points (a reading above 50 indicates expansion). “Respondents expressed concern with the escalation in the U.S.-China trade standoff, but overall sentiment remained predominantly positive” according to Tim Fiore, Chair of ISM’s Manufacturing Business Survey Committee. May results do not reflect the potential Mexican tariffs currently being discussed which could presage further deterioration in June.

Of the 18 manufacturing segments ISM tracks, 11 reported growth in May. Fabricated Metal Products, one of WNY’s major segments, was one of six that reported contraction. Survey respondent comments included:

“The threat of additional tariffs has forced a change in our supply chain strategy; we are shifting business from China to Mexico…” (Chemical Products)

“Business continues to be very strong… Key commodity costs like steel have continued to come down. Lead times with suppliers have stabilized after moving out two to three times what they were a year ago.”  (Machinery)

“Ongoing tariffs impacting costs and influencing supplier realignment on country of origin. Border issue is causing delays in imports from Mexico.” (Computer & Electronic Products)

“Sales remain strong. Labor remains tight. Tariffs are having a significant impact on cost of goods. No impact on where we buy our goods.” (Food, Beverage & Tobacco Products)

“Newly increased tariffs on Chinese imports pose an issue on a number of chemicals and materials that are solely produced in China.” (Plastics & Rubber Products)

See full report here.

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