There is more evidence a key pocket of the U.S. economy is slowing: manufacturing.
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The ISM September Manufacturing Index slipped to 47.8, down 1.3 percentage points from August. A read below 50 signals contraction. More worrisome is new export orders, which hit 41 percent, a 2.3 percentage point drop from last month.
“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019. Overall, sentiment this month remains cautious regarding near-term growth,” said Timothy R. Fiore, chair of the Institute for Supply Management, Manufacturing Business Survey Committee, in the report.
The data has upped recession concerns among economists.
"ISM at 47.8 is bad but new export orders at 41 is even worse ... There is no end in sight to this slowdown, the recession risk is real" said Torsten Slok, chief economist at Deutsche Bank Securities.
The data, coupled with construction spending in August that was little changed, pressured U.S. stocks which gave up gains on Tuesday.
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President Trump lashed out at the Federal Reserve following the data points.
"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. Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!" he tweeted on Tuesday.
Ahead of the data, Trump's top trade adviser Peter Navarro said sealing the U.S.-Mexico-Canada Agreement (USMCA) currently with Congress, will give a real boost to the U.S. economy.
“This is gonna be the hunt for USMCA in October. To me, that’s the most important thing for the global economy, for this hemisphere and for America. So, I think if we were to pass the USMCA, its good for both farmers and manufacturers - they’re in a trade deal. It’s good for all 50 states. It’s hundreds of thousands of new jobs. It’s about a point in growth on the GDP. That’s what I’m looking for,” said Navarro during an interview on FOX Business’ “Mornings With Maria” on Tuesday.