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Trends: U.S. Factory Gauge Slumps to Six-Month Low

A gauge of U.S. manufacturing fell by more than forecast to a six-month low, as orders and hiring cooled amid escalating trade tensions with China, data from the Institute for Supply Management showed.

This story by Shobhana Chandra originally appeared in Bloomberg.

The report may add to concerns that President Trump’s trade war with China is starting to inflict more pain on manufacturing even as the industry continues to expand. The export-orders gauge fell for the third time in four months, while new orders decelerated for the fourth month in five.

The data follow other reports this week showing manufacturing in some of Asia’s most export-driven economies softened in October, highlighting spillovers from the trade spat. At the same time, U.S. stocks rallied Thursday after Trump said he had a productive conversation with Chinese President Xi Jinping on trade.

Elevated price pressures and a pickup in measures of backlogs and supplier deliveries show lingering supply-chain bottlenecks. Disruptions and data volatility related to major storms in September and October may have played a role. Another potential headwind is the stronger U.S. dollar, which has rallied sharply in the past six months.

Some of the results may reflect an unwinding of gains from previous months when manufacturers were rushing to purchase materials and export their products ahead of U.S. tariffs and counter-levies by China. Trump has threatened to raise the tariffs further and on more products.

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