U.S. New York Fed Manufacturing Index Plunged in September, with All Metrics Hitting Their Lowest Levels Since April 2024—What’s Your Take?

This index has a rather dramatic full name: the Empire State Manufacturing Survey! Anyway, ahead of the Fed’s anticipated rate cut on September 16, policymakers are doing everything possible—even ‘selling the pot and pawning the wok’—to push the economy to a bottom first, then, amid widespread public anticipation, see whether Trump can ‘turn the tide at Liwan’! Yet I worry that even a rate cut may prove largely ineffective: under current U.S. economic conditions, the primary benefit of easing is reducing fiscal burdens—but the core challenge facing the U.S. economy, much like ours, lies in structural transformation. Historically, during periods of structural transition, relying solely on monetary policy tools cannot sustain the economic floor. Thus, today’s Federal Reserve is essentially shouldering blame, while the Treasury Department’s domestic capacity is severely constrained by mounting debt—a key underlying problem! From this month’s New York manufacturing data, we see persistent contraction in U.S. demand—which is truly alarming. As the world’s largest final destination market, any sustained U.S. consumption slowdown triggers a multiplier effect upstream across global production chains. Our own hard-won data recovery over the past few months must now brace for potential severe spillovers if the U.S. experiences a genuine hard landing in Q4. Notably, both new orders and shipments in this report have simultaneously fallen to their lowest levels in nearly two years—reflecting dual weakness in domestic and external demand. Externally, global supply-chain reconfiguration and trade frictions (e.g., Trump’s tariff policies raising import costs) weigh heavily; internally, weakening consumer purchasing power plays a role—real wage growth in August stood at just 0.7%, the lowest in a year, suppressing end-demand. Moreover, the New York Fed report shows rising payment price and receipt price indices, indicating continued upward pressure on raw material costs. This compounds the cost-inflationary impact of Trump’s tariff policies, further squeezing manufacturers’ profit margins. Meanwhile, uncertainty surrounding future tariff policy has led firms to freeze capital expenditures and hiring—exacerbating the manufacturing contraction. For the Fed, markets view a rate cut as inevitable: although August CPI stood at 2.9% YoY and core CPI at 3.1%—still above target—unemployment rose to 4.3%, and initial jobless claims hit a four-year high, forcing the Fed to tilt toward employment stabilization over inflation control. CME data shows a 95.9% probability of a 25-basis-point cut in September, with several officials—including Waller and Daly—publicly endorsing easing. At this juncture, Trump’s renewed call for an ‘immediate, large-scale rate cut’ primarily aims to deflect attention from worsening labor-market tensions. Yet ever since the launch of Trump’s ‘Big and Beautiful’ Act—and reinforced by the Mar-a-Lago Agreement and Pennsylvania Plan—the U.S. economic revival blueprint linking tariffs, manufacturing, and stablecoins appears locked in. Historical experience, however, cautions that aggressive easing before clear disinflation risks undermining market confidence in policy credibility—with less-than-ideal outcomes likely. Even if a cut occurs this week, its transmission to the real economy will take time. Meanwhile, manufacturing weakness may accelerate layoffs, fueling a vicious cycle of ‘weaker demand → deteriorating employment → shrinking consumption’—a cycle whose impact extends far beyond the U.S., affecting fully 30% of global consumption. We can reasonably anticipate stagflation following a substantial rate cut: August saw CPI and unemployment rising concurrently; the Congressional Budget Office (CBO) forecasts unemployment reaching 4.5% and inflation 3.1% in 2025—forming the adverse combination of low growth plus high prices.

U.S. February ISM and S&P Manufacturing PMI Indices Show Continued Expansion, but Input Price Index Soars—What’s Your Take?

Right now, Iran dominates headlines. U.S. President Trump is scheduled to meet with the Treasury Secretary and Energy Secretary this afternoon around 2 p.m. The February ISM and S&P PMI releases confirm that U.S. manufacturing maintained expansion in February—but starting in March, sharp spikes in raw material and fuel prices are expected to intensify cost pressures on manufacturers, adding further constraints to the Fed’s rate-cut path and abruptly heightening inflation risks. In response, economies including Europe, Australia, our own, and Thailand have either implemented or signaled tightening policy measures. Compounding matters, Iran’s recent closure of the Strait of Hormuz has effectively stalled the global economy! According to the Institute for Supply Management (ISM), its February 2026 U.S. Manufacturing PMI stood at 52.4—slightly down 0.3 points from January—but remained above the 50 threshold for the second consecutive month, signaling ongoing expansion. Crucially, the input prices sub-index surged 11.5 points to 70.5, hitting a near-four-year high and underscoring renewed inflationary pressure. Earlier, S&P Global’s final February U.S. Manufacturing PMI came in at 51.6—above both consensus (51.4) and preliminary (51.2) readings. Its employment sub-index reached 50.4 (at the breakeven line), marking the weakest reading since July 2025, yet still reflecting seven straight months of expansion; meanwhile, the output sub-index fell to its lowest level since September 2025. Additionally, S&P Global’s new orders declined for the second time in three months, and export orders plunged sharply—driven by firms’ growing uncertainty about order visibility. The divergence between the two PMI surveys isn’t contradictory; rather, differing methodologies highlight the fragility and bifurcation within the U.S. recovery. Relative to ISM, S&P Global’s readings appear weaker because ISM’s sample skews toward larger enterprises and domestic manufacturing demand, whereas S&P Global includes more SMEs and export-oriented firms—segments disproportionately impacted by weak exports and rising costs, resulting in lower overall readings and softer sub-indices. Looking at ISM’s core data: though the headline index edged down slightly, new orders and output sub-indices held steady—serving as the main pillars sustaining manufacturing expansion. Simultaneously, the employment sub-index rose to 48.8, its highest in nearly a year, indicating a marked slowdown in manufacturing job losses and a modest rebound in employers’ hiring confidence. This aligns partially with Bank of America’s recent research note suggesting ‘a new global industrial cycle may be emerging,’ and with Fed Governor Cook’s observation that ‘AI is reshaping the structure of the U.S. labor market’—hinting that U.S. manufacturing may be gradually exiting prior weakness and entering a phase of moderate recovery. Still, a ‘low-employment economic boom’ is likely to persist. Most striking in this release, however, is the sharp surge in the input prices index—the single greatest latent risk confronting the U.S. economy today.

Growth in US Manufacturing Remains Stunted, Input Price Pressures Intensifying – Fed

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The Federal Reserve reported mixed US manufacturing growth with significant input price pressures driven by rising energy, freight, and raw material costs. Petrochemical activity remained elevated in the Gulf region while tariffs and fuel expenses burdened manufacturers.

icis

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US manufacturing output falls in August after rising for seven straight months

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Growth in US Manufacturing Remains Stunted, Input Price Pressures Intensifying – Fed

Growth in US Manufacturing Remains Stunted, Input Price Pressures Intensifying – Fed

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