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US Manufacturing Contracts for Sixth Consecutive Month

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America cannot find its footing in manufacturing. The ISM Manufacturing PMI came in at 48.7 in August 2025, marking the sixth consecutive month of contraction. Although the figure has improved from July’s reading of 48, there is ongoing confirmation that capital is bleeding out of US manufacturing.

New orders did rise to 51.4, a stark uptick from July’s reading of 47.1, but production fell to 47.8 in August from 51.4 in July. “In August, U.S. manufacturing activity contracted at a slightly slower rate, with new orders growth the biggest factor in the 0.7-percentage point gain of the Manufacturing PMI,” said Susan Spence, chair of the ISM’s survey committee. “However, since production contracted at a rate nearly equal to the expansion in new orders, the Manufacturing PMI increase was nominal.”

The issue is far deeper than a capital fleeing uncertainty from tariffs, as this issue has been ongoing. In fact, one of Trump’s motives for implementing tariffs was to boost domestic manufacturing. Trump openly stated that he wanted companies to move manufacturing to the US to avoid tariffs. This was intended to promote domestic trade as companies will seek to avoid levies. We did see a temporary uptick in manufacturing demand when these tariffs were announced but it was not enough to sustain the sector. Although companies began to invest in the US, overall trade remained volatile. There were supply chain issues by May, and come September, the US is still at a standstill regarding tariffs. Nations have even halted postal shipments to the US entirely as they cannot process the ongoing tariff changes.

Again, US manufacturing was in a dire situation before Trump entered the office. The Inflation Reduction Act promised to fund the Infrastructure Investment and Jobs Act, which was intended to expand American manufacturing, but regulation and an emphasis on clean energy initiatives drove business away. The Biden Administration had promised to add 1 million manufacturing jobs to the US but failed miserably.

This has nothing to do with America being uncompetitive. The American worker is among the most productive in the world. But if you add 30–40% in taxes and compliance costs on top of wages, while competitors in Asia operate under far leaner systems, capital naturally migrates to where it will be treated best.

Manufacturing in the United States has been in decline for decades due to systemic policy failures. The politicians will blame China and tariffs for the downturn. The contraction we see today is merely the continuation of a decades-long trend set in motion by shortsighted policies.