US Manufacturing Slump Continues Amid Economic Uncertainty

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(The Epoch Times)—A new report from the Federal Reserve shows that U.S. manufacturing activity continued to decline in September, while a forward-looking indicator from the Conference Board signaled uncertainty for economic activity ahead, due in part to a sharp drop in factory new orders.

The Fed’s Beige Book, released on Oct. 18, revealed a broad contraction in manufacturing across the United States, reflecting weaker demand and sluggish production.

Most of the Fed’s 12 districts reported declining manufacturing activity, exacerbated by difficulties in finding qualified workers and, in some cases, persistently weak sales.

The Fed’s data on the manufacturing slump was echoed by the Conference Board’s Leading Economic Index (LEI) report, released on Oct. 21, which recorded a 0.5 percent drop in September—an acceleration from August’s 0.3 percent decline. A significant factor in September’s decline was a sharp decrease in new factory orders, contributing to a 2.6 percent decrease in the index over the past six months.

The LEI, which is designed to forecast economic turning points, points to weak economic growth heading into 2025.

“Weakness in factory new orders continued to be a major drag on the US LEI in September as the global manufacturing slump persists,” Justyna Zabinska-La Monica, a senior manager at the Conference Board, said in a statement. “Overall, the LEI continued to signal uncertainty for economic activity ahead and is consistent with The Conference Board expectation for moderate growth at the close of 2024 and into early 2025.”

The persistent downturn in U.S. manufacturing has become a focal point in the 2024 presidential race.

Meanwhile, economic sentiment has taken a downward turn recently.

Even though inflation has eased since the June 2022 recent peak of 9 percent, the Fed’s Beige Book indicates that many districts reported increasing price sensitivity among inflation-weary consumers. Input costs rose faster than selling prices in September, compressing profit margins and further pressuring U.S. businesses, including manufacturers.