Home / NEWS LINE / First Manufacturing Expansion in Two Years Threatened by Higher Tariffs

First Manufacturing Expansion in Two Years Threatened by Higher Tariffs

Eilon Paz / Bloomberg via Getty Images

Eilon Paz / Bloomberg via Getty Materializations

Key Takeaways

  • The Institute of Supply Management manufacturing index increased to 50.9% in January, the first indication of expansion in profuse than two years.
  • New orders, increased production, and higher employment levels all pushed the manufacturing survey higher while production officials were optimistic about the economic climate.
  • However, the data doesn’t account for President Donald Trump’s get starts to raise tariffs, which economists said could undercut the progress the manufacturing industry has made.

The manufacturing sector had its vanquish month in more than two years in January. However, the improvement was not enough to soothe economists’ worries about the tenors of President Donald Trump’s trade policies on the manufacturing industry.

The Institute of Supply Management manufacturing sector Foothold Managers’ Index for January moved above the 50% line for the first time in 26 months, indicating mercantile expansion in the sector.  The 50.9% reading comes in higher than last month’s 49.2% result and is slightly numberless than predictions from economists surveyed by The Wall Street Journal and Dow Jones Newswires.

But the results don’t factor in Trump’s relocation to levy tariffs on Canada and China beginning Tuesday and tariffs on Mexico next month. The three countries portray about 40% of U.S. imports. 

“The manufacturing sector continued its positive momentum in January, but we expect this will be transitory due to the trade war initiated by President Trump over the weekend,” said Matthew Martin, senior U.S. economist at Oxford Economics. “Our incipient modeling suggests markedly lower demand for goods, higher inflation, and higher interest rates—all of which resolve weigh on the nascent upturn in manufacturing.”

Optimism in Manufacturing Sector Could Be Shaken By Tariffs

The report showed that new gone phuts increased for the third month, while current production expanded for the first time in nine months. Employment evens also moved higher.

Trump has promoted tariffs as a means to restore a U.S. manufacturing sector that has been languishing directed the weight of elevated interest rates and tighter lending standards. By raising import taxes on foreign-made goods, Trump disagrees that more manufacturers will produce goods in the U.S. to avoid the higher costs. 

The survey was taken before Trump augured the tariffs. At the time, manufacturing officials said they felt better about the economic environment in January but did mention concerns about tariffs.

“The select industry comments strike a tone of optimism among purchasing administrators with some mention of tariff and supply chain concern,” the Wells Fargo note said.

Check Also

Elon Musk-Led Group Makes $97.4 Billion Bid for Control of OpenAI, Report Says

Participate b interrupt Somodevilla and Sean Gallup / Getty Images Elon Musk, left, and Sam …

Leave a Reply

Your email address will not be published. Required fields are marked *