According to the Institute of Supply Management (ISM), factory activity has declined since July's 51.2 index - dropping to 49.1 for August. This was the lowest reading since January 2016 and marks the fifth straight month of manufacturing decline. 

It differs by sector, however. The ISM identified 16 manufacturing sectors in its report, analyzing each sector's performance since the start of the trade war.


Seven of 16 sectors have seen contractions because of tariffs, ISM reports. Those are Apparel, Leather & Allied Products; Fabricated Metal Products; Transportation Equipment; Primary Metals; Plastics & Rubber Products; Paper Products; and Electrical Equipment.


The other nine sectors have seen growth. Those are Textile Mills; Furniture & Related Products; Food, Beverage & Tobacco Products; Wood Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Machinery; Miscellaneous Manufacturing; and Chemical Products.

"Companies that deal with wood products and makes furniture, in particular, were boosted by single-family housing starts driven by low mortgage rates, low unemployment rate and strong consumer spending," writes Zacks Equity Research in their report analysis. "In fact, repairing and remodeling activities will further raise demands."

Furniture saw employment growth, a decrease in prices for raw materials, a growth in new export orders, and a growth in imports. 

Wood Products, along with 10 other sectors, saw a decline in new orders, however. The sector also saw a decrease in employment, slower supplier deliveries, a decrease in imports, but also a decrease in price of raw materials and an increase in inventories. 

The trade war is having an effect, wrote the ISM.

"Respondents expressed slightly more concern about U.S.-China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders," said ISM Chairman Timothy Fiore. "Respondents continued to note supply chain adjustments as a result of moving manufacturing from China. Overall, sentiment this month declined and reached its lowest level in 2019."

See the full report here.


Have something to say? Share your thoughts with us in the comments below.