MNI INTERVIEW: ISM Chief Sees No End In Sight To Factory Slump

U.S. manufacturing will remain in contraction as demand remains weak and for as long as trade uncertainty continues to be a drag on businesses, Institute for Supply Management manufacturing chair Susan Spence told MNI.

"I do not see anything that will turn the ship," Spence said in an interview. "The [trade] uncertainty still continues to kill us."

Two of the four demand indicators from ISM decreased over the month. The ISM manufacturing index declined 0.5pt to 48.2 in November, almost a full percentage point below expectations and a ninth consecutive month of contraction. A level at 50 represents the breakeven point dividing expansion and contraction. 

"There's nothing that we're reading or seeing in the news and what's going on with tariffs that give me any confidence that all of a sudden the customers are going to come start ordering from us," she said. 

New orders decreased 2.0pts to 47.4, employment fell 2.0pts to 44.0, and prices increased 0.5pt to 58.5. The new export orders component increased 1.7pts to 46.2. The production measure increased 3.2pts to 51.4.

DEMAND, TARIFFS

The ISM manufacturing chief noted contracting demand and said she has little confidence that new orders will expand in coming months as some analysts predict. 

"These are not customers who are all of sudden being confident and ordering from U.S. manufacturers," she said. "It seems to be that the customer inventories are so low that they have to reorder in certain, specific sectors. And it's just not sustainable."

"We see this wave going through the supply chain as where we're going to continue to be sitting," she said. "That is possibly until we see tariffs get decided from the Supreme Court, or maybe until people start making decisions, which they're not apt to do if there's so so much uncertainty."

UNCERTAINTY

Spence is increasingly concerned about the loss of foreign demand for U.S. manufacturing products. "The longer the uncertainty goes on, the longer customers outside of the U.S. have to go figure out who else they're going to buy from, if they can," Spence said. 

Overall policy uncertainty, tariff uncertainty, and the looming decision from the Supreme Court on tariffs weighs on businesses' decision-making and growth, she said. 

"It's not helping. Not only is it not driving manufacturing back to the U.S., it is giving customers outside of the U.S. time to go develop other sources. And that really worries me," Spence said. "Perhaps once it all gets straightened out, maybe the customers aren't going to be there."

Spence noted that supplied deliveries sped up in November, but suggested it may be due to weak demand. "That's not necessarily a good thing. We think that means that there's just not a whole lot of work there," Spence said. (See: MNI INTERVIEW: Fed To Slow Easing, '26 Cuts Not Certain-Clouse) 

WORKFORCE 

The ISM employment index in November was the lowest since August and has been in contraction for ten straight months. 

"Without understanding what's going to happen with tariffs, we really can't expand our workforce, and there's not an order flow coming in anyway," Spence said. "We want to hold on to folks, but that can't happen forever."