While manufacturing makes up just over a tenth of gross domestic product, slowing in the sector combined with cooler business investment and economic growth puts the longest-ever American expansion in a more precarious position. Greater weakness may threaten President Donald Trump’s re-election prospects in 2020.
Shortly after the report, Trump renewed his attacks on the Fed and Chairman Jerome Powell, saying they “allowed the Dollar to get so strong,” hurting manufacturers. Fed officials “don’t have a clue” and are “pathetic,” the president tweeted.
Supplier deliveries was the only sub-index above 50, which for that gauge indicates slower deliveries. A Fed measure of production already signaled U.S. manufacturing is in a recession when it contracted in the first half of this year.
The pullback in the employment gauge, to 46.3 from 47.4, comes amid economist projections that the main monthly Labor Department report Friday will show limited manufacturing payroll growth. Economists forecast a 3,000 gain in factory employment for a second month.
Weak World

Elsewhere, reports this week have shown China’s factory sector contracted for a fifth month in September. The euro area’s manufacturing slumped as German factories experienced their worst month since the depths of the financial crisis.
The latest disappointing data add to a growing pile of evidence of further dimming in the global economic outlook. The International Monetary Fund, already projecting a 3.2% growth pace this year that would be the slowest since the financial crisis, will release an updated estimate later this month as policy makers from across the world gather in Washington for the fund’s annual meeting.
The ISM’s index of prices paid remained below 50, suggesting muted inflationary pressures. Order backlogs declined, while the customer inventories index increased.
U.S. factories could be set to take another hit. The United Auto Workers union called its first national strike against General Motors Co. since 2007 midway through the month, halting production at the carmaker’s dozen assembly plants and 22 stamping, powertrain and parts factories. The work stoppage has spilled over to effect suppliers including American Axle & Manufacturing Holdings Inc., which has temporarily laid off staff.
A separate U.S. manufacturing purchasing managers’ index showed improvement on Tuesday. The gauge from IHS Markit rose to 51.1 from 50.3, with employment at the best reading since May and new orders up from the prior month. Analysts expected a level of 51, equal to the preliminary reading.
--With assistance from Chris Middleton and Craig Trudell.