US Economy News: Factory Growth At Lowest Level Since 2016

A national survey on Monday revealed that factory growth in the United States is moving at its slowest pace since October 2016.

The Institute for Supply Management's (ISM) Manufacturing Index fell from 52.8 to 52.1 in May, its lowest level since the beginning of U.S. President Donald Trump's presidency. A score above 50 indicates growth, with Wall Street economists telling Reuters that they had expected the number to rise to 53.

Chairman of the ISM Timothy Fiore said that the score "illustrates that the factory sector is continuing to struggle in the face of weak global demand." The Trump administration's ongoing trade feud with China is likely a big reason behind the slowdown, with Fiore saying that "The China issue is clearly not going away in the short term."

Bloomberg also weighed in on the issue. "Bloomberg Economics expects the ISM to fall further in the near term, as many respondents were already caught off guard by the Trump administration widening the trade war against China," Bloomberg economists Carl Riccadonna and Yelena Shulyatyeva said. "Yet assuming trade tensions do not escalate substantially, above-trend growth should remain possible this year."

"The sector can't thrive when it's being hit by new taxes at random every few weeks," Ian Shepherdson, chief economist at Pantheon Macroeconomics told Reuters.

U.S. President Donald Trump was elected on the promise that he would bring back manufacturing to parts of the country where factories had left due to globalization. To this end, he has initiated a trade war with China by slapping tariffs on Chinese imports, and also has promised to raise tariffs on Mexican goods to stem illegal immigration. The news from the ISM could serve as a refutation of whether Trump's tariff policy actually works in boosting American factory output.