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Surveys: U.S. Manufacturing Showing Weakness

Growth in the sector is slowing – not a good sign for the overall economy, some analysts say.

Two separate surveys indicated that expansion is slowing in the U.S. manufacturing sector – a potential headwind for the broader national economy amid America’s escalating trade tensions with China, Mexico and others.

The news is relevant for the domestic promotional products industry, whose aggregate sales often correlate to the nation’s economic performance.

The IHS Markit U.S. Purchasing Managers’ Index dropped from 52.6 in April to 50.5 in May – the lowest level since September 2009. Easing output growth and a fall in new orders – the first since August 2009 – contributed to the index’s decline.

“Weak demand conditions and ongoing trade tensions led firms to express the joint-lowest degree of confidence regarding future output growth since data on the outlook were first collected in mid-2012,” IHS Markit said in a statement.

Meanwhile, the Institute for Supply Management’s Purchasing Managers’ Index dropped from 52.8 in April to 52.1 in May. That was the lowest reading since October 2016. While tallies above 50 indicate expansion, an economist told CNBC that the May score of 52.1 equates to GDP growth of 1.5%.

Sub-indexes in the ISM study painted a muddled picture. For instance: While the new orders index ticked up one percentage point to 52.7 in May, the production index dropped one percentage point to 52.3.

“The PMI continues to reflect slowing expansion,” said Timothy R. Fiore, who heads ISM’s monthly survey on manufacturing conditions. “Respondents expressed concern with the escalation in the U.S.-China trade standoff, but overall sentiment remained predominantly positive.”