US manufacturing turned down in October on the PMI index, dropping from 49.1 in September to 48.7 in October, marking the eighth consecutive month of contraction. Price pressure may have eased (58 from 61.9), but production (48.2 from 51), inventory (45.8 from 47.7), and deliveries (54.2 from 52.6) have all declined.
Employment in the sector continued to decline (46 from 45.3), and 67% of panelist noted that companies are working on managing their current workforce rather than hiring. Again, lower rates are unlikely to address this structural problem or encourage companies to expand during a contracting business environment. Eight consecutive months of decline should be a warning as manufacturing declines often precede recessions, or in this case, ongoing stagflation.
Tariffs may be harming new orders and exports, but US manufacturing has been on the downswing far longer than April 2025. There are deeper structural forces at play from regulatory burdens to high corporate taxes and supply chain stress, but most notably, other countries are not interested in buying. Everyone is grappling with their own debt burdens and the global economy, not merely the US, has been contracting overall.
Manufacturing is not driving the US economy. The current administration has been keen on expanding the sector but orders are down and this has proven to be more than a temporary drop. Capital is fleeing to non-traditional assets as confidence in the established economic framework continues to decline.