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Manufacturing Index Drops Again Amid Tariff Fallout and Shutdown

10/2/2025

41 3 Full Breakdown

Summary

Manufacturers Face Contraction

The ISM manufacturing index fell to 49.1 in September, contracting for the seventh straight month.
New orders at 48.9 and employment at 45.3 indicate ongoing contraction; only five of 18 industries grew.
Tariffs imposed during the Trump administration continue to impact manufacturers, causing delays and increased costs.
Government shutdown adds uncertainty; economists expect further Federal Reserve rate cuts.

Summary

South Korea's Manufacturing Growth

South Korea's factory activity expanded in September for the first time in eight months, with a PMI of 50.7, driven by overseas demand.
Exports rose 12.7% year-on-year to $65.95 billion, fastest in 14 months, aided by AI-driven semiconductor demand.
Tariffs on autos and steel cloud the outlook; U.S. exports fell 1.4% as Seoul seeks a deal by the Asia-Pacific Economic Cooperation (APEC) summit.

History

Historical Context

The 2008 financial crisis triggered a severe contraction in global manufacturing, with the U.S. sector shrinking by 15.6% in 2009. Major companies like General Motors and Chrysler received $80 billion in bailouts. Today, the U.S. manufacturing ISM index stands at 49.1, contrasting with South Korea's 50.7, highlighting divergent recovery trajectories amid ongoing economic uncertainties and tariff implications.

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Manufacturers Face Contraction

The ISM manufacturing index fell to 49.1 in September, contracting for the seventh straight month.
New orders at 48.9 and employment at 45.3 indicate ongoing contraction; only five of 18 industries grew.
Tariffs imposed during the Trump administration continue to impact manufacturers, causing delays and increased costs.
Government shutdown adds uncertainty; economists expect further Federal Reserve rate cuts.

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