“Global trade remains the most significant cross-industry issue, but there are signs that several industry sectors will improve as a result of the ‘phase one’ trade agreement between the US and China,” said Timothy Fiore, chair of the ISM manufacturing business survey committee.
Last week, the Federal Reserve argued in a paper that import tariffs hurt US manufacturing. “A positive effect from import protection is offset by larger negative effects from rising input costs and retaliatory tariffs,” it said.
Even though the US economy is driven primarily by consumer spending, the on-going manufacturing slump is affecting GDP forecasts for the final quarter of 2019.
The New York Fed lowered its fourth quarter growth expectations to 1.1% from 1.2% following the ISM data. The Atlanta Fed still forecasts 2.3% growth between October and December.
— Katie Lobosco contributed to this report.