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Despite the rush of new orders, US production activity in August was relatively flat compared to the previous month because tariff uncertainty was obtained.
The ISM index recorded 48.7 % in August and increased by 0.7 % compared to July. The PMI index shows below 50 % of the industry in contraction.
Production decreased by 3.6 % to 47.8 % compared to the results of July and eliminated almost the profit from new orders in August.
“This is the first time that new orders, which have increased 4.3 percent to 51.4 %, have expanded in the past six months,” said Susan Spence, chairman of the ISM production trade committee. However, three of the four main indicators of demand – new export orders, retardation of customer order and inventory – were in contraction.
Spences were optimistic about the inventory recovery and said, “In some cases customers need to be tidy again.” Unfortunately, he said producers are still moving on employment and pricing challenges.
“We believe that we want to see a big turn until the tariff transactions are set and changed,” Species said.
He added: “Approximately 69 % of GDP is contracted.
In this call, Spence noted that 89 % of the participants in the monthly ISM reviewed tariffs as “worrying issues”. In general, Spence said there are 15 negatives for each positive comment. While some companies are trying to hire, Spence said more statements show that employers do not replace people who have either left or fired, or closed factories.
Uncertainty is increasing because US judges on whether the Trump administration’s tariffs are even legal. The Federal Court of Appeal ruled on August 29 that the President’s widespread use of emergency powers to impose widespread tariffs was illegal, but delayed any action until mid -October until it would be necessary to review the Supreme Court.
“The pressure of these guys is to try to understand what their input price will be, so their companies can understand,” Do we attract it? ” Do we pass it? Does it do with our profit margins? “” Failure to know what the courts will do, or even if the court does a job, we now have a supreme court that will rule. “
Meanwhile, PMI produced S&P Global registered 53 % in August, up 3.2 % compared to July. This increase was directed by a combination of new orders and higher inventory structure. It was also the strongest progress of the index in operational conditions since May 2022.
Chris Williamson, a senior business economist in the S&P global market information, attributed his profits to increased sales and pickups to meet demand for new orders. He said in a statement that factories are reporting to jump in warehouse assets because of concerns about rising prices and supply restrictions.
“Increasing costs will be transmitted to customers through a widespread increase at the factory gate price,” Williamson said. “The big question is that the increase in price in the coming months will be higher as consumer prices.”
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