Details suggest manufacturers are scrambling as best they can to avoid Trump’s tariff threats. 
Please consider the November 2024 Manufacturing ISM® Report On Business® emphasis in bold by ISM, italics mine.
The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.
“U.S. manufacturing activity contracted again in November, but at a slower rate compared to last month. Demand continues to be weak but may be moderating, output declined again, and inputs stayed accommodative. Positive signs for demand include the (1) New Orders Index returning to expansion territory, (2) New Export Orders Index increasing moderately (up 3.2 percentage points but still in contraction territory), (3) Backlog of Orders Index dipping further into strong contraction territory, and (4) Customers’ Inventories Index indicating levels were only marginally above ‘too low.’ (For more, see the Customers’ Inventories Index summary section.) Output (measured by the Production and Employment indexes) continued in contraction: Employment shrunk, but at a much slower rate, and production took a small step in the right direction. Foundational industries like Chemical Products and Fabricated Metal Products (that provide products and components across the manufacturing sector) continued to show weakness, indicating that recovery may still be two to three months away. Inputs — defined as supplier deliveries, inventories, prices and imports — generally continued to accommodate future demand growth, with inventories improving and suppliers continuing to improve delivery performance.
“Demand remains weak, as companies prepare plans for 2025 with the benefit of the election cycle ending. Production execution eased in November, consistent with demand sluggishness and weak backlogs. Suppliers continue to have capacity, with lead times improving but some product shortages reappearing. Sixty-six percent of manufacturing gross domestic product (GDP) contracted in November, up from 63 percent in October.
Respondent Comments
- “High mortgage rates continue to hamper demand for new housing construction, which is a key market for adhesives and sealants.” [Chemical Products]
- “Business remains slow. We anticipate that the first half of 2025 will be similar and hope that demand increases in the second half of 2025.” [Transportation Equipment]
- “Inflation, even after easing, continues to impact demand. Consumers are looking for value, and purchasing behaviors are changing as many shoppers reduce consumption, causing softer volume.” [Food, Beverage & Tobacco Products]
- “Backlog is rising precipitously after 18 months of troughing. The long-awaited pent-up buying has started. Competition for qualified technical labor is a constraint on operational throughput.” [Computer & Electronic Products]
- “A general construction slowdown in the fourth quarter has created a surplus of finished goods, creating the need for an extra two weeks of shutdown over the Christmas holiday period. We are carefully watching demand in the first quarter to determine if more permanent workforce reductions will be necessary.” [Machinery]
- “Business is slowing as customers destock and appear uncertain about near-term demand. Preliminary forecast for 2025 is down significantly; we hope to see improvements now that we are beyond U.S. election uncertainties.” [Fabricated Metal Products]
- “Our supplier has a positive outlook on the U.S. economy going into 2025. Our business is seeing an uptick in sales forecasts for the first quarter of 2025 versus the fourth quarter of 2024. Overall, our outlook for 2025 is optimistic.” [Textile Mills]
- “We’re finally seeing traction in the last few weeks (with) a higher volume of orders. Backlog is starting to grow.” [Electrical Equipment, Appliances & Components]
- “Late to the game, we are now working on our buying plan in light of potential increased tariffs on imports from China. Cost and capacity of U.S. manufacturing is a concern; a lack of relationship with alternate low-cost international manufacturers is another.” [Miscellaneous Manufacturing]
- “After the election, we have seen an uptick in customers wanting to come back to the U.S. for making their products. We are working through these inquiries. They seem very motivated.” [Primary Metals]
Negative and Positive Comments
Negative Comments: 1, 2, 3, 5, 6, 9
Positive Comments: 4, 7, 8, 10
Scrambling to Avoid Tariffs
Please note the improvement in inventories from 42.6 to 48.1. A scramble to get ahead of tariffs is underway.
Number 9 is interesting: “Late to the game, we are now working on our buying plan in light of potential increased tariffs on imports from China. Cost and capacity of U.S. manufacturing is a concern; a lack of relationship with alternate low-cost international manufacturers is another.”
Businesses late to the game may have thought Kamala Harris would win. Regardless, in light of Trump tariffs, all importers are scrambling to locate “alternate low-cost” suppliers.
These actions will shift imports, not reduce them. And shifting supply chains, in and of itself, increases costs.
Electronic Products
- Point four is interesting. “Backlog is rising precipitously after 18 months of troughing.” The source of that comment was Computer & Electronic Products
- Point 8, was also a positive comment on backlogs. “We’re finally seeing traction in the last few weeks (with) a higher volume of orders. Backlog is starting to grow.” That comment was in a related industry group, Electrical Equipment, Appliances & Components.
Meanwhile, the backlog index further contracted to 41.8 as shown in the lead chart.
Perhaps points 4 and 8 are outliers, but it could be something with chips or AI, or alternatively point number 9 once again.
Conclusion
The manufacturing index improved slightly in that it is less negative, but the only strength is suspect.
Some manufactures are scrambling to find alternative suppliers. Others are stockpiling made in China to avoid tariffs.
Trumpian Tariff Blast Coming
Nothing good will come from a Trumpian tariff blast.
For discussion, please see Trump’s Obvious Bluff Over BRICS Currency Proves He Is Clueless on Trade
Trump’s big problem is that he does not understand what’s driving trade. Tariffs won’t fix it.
For discussion, please see the above link.
Mish – please delete post and ban him. He posted comments on multiple posts selling something.
Mish recession call? Or just normal whinging? Do I need to slam a shot?
This comment section isn’t for marketing products for sale.
“Nothing good will come from a Trumpian tariff blast.”
Meanwhile over on that other guy’s web site who has a much less negative view on Trump, here’s his latest take:
“Factory Construction Spending Soars to New Record, +16% YoY, +242% since 2019: Result of Corporate & Strategic Rethink
“Trump’s tariffs — a tax on profit margins of US & foreign companies — will push in the same direction as Biden’s taxpayer-and-debt-funded incentives.”
“After decades of no-matter-what globalization, there is now a widespread rethink underway about production in the US. These facilities will all be highly automated plants that produce complex high-value products. Forget T-shirts. They’re not going to be produced in the US.”
“Trump’s company-funded tariffs will also promote investment in manufacturing facilities in the US, but the motivation is different. Companies would want to dodge the tariffs that are a tax on their profit margins, and they can dodge them by producing in the US, which would also allow them to dodge transportation costs, loss of IP, and other risks.”
“Companies cannot automatically pass on the tariffs; they’re already charging the maximum price they can without losing sales. Price increases will hurt those sales. Buyers can just buy something else or not buy anything.”
“The rethink about risks & costs of globalization and China-dependence is another big factor. The increasingly complicated and stressed relationship between the US and China has exposed the scary dependence by US companies on production in China as a fundamental risk, not only for the companies, but also for national security.”
I don’t know about you, but I’m going with the other guy’s view.
It doesn’t make sense to take one metric and amplify it as if it alone determines what is going to happen… there’s a complex interplay between individual metrics that propagates through the financial system as a network with all kinds of effects.
In general, stress testing businesses to force them to fold or innovate to become more efficient has long-term benefits, the carnage from collapsing zombi companies might be awful to begin with, but from the ashes of burning slums, growth emerges.
I didn’t understand a word you said. However, there’s nothing complex about tariffs forcing companies to find a cheaper, more efficient way to make or import goods.
And Wolf’s point about strategic goods lines up perfectly with Mish’s same point about the direction of US manufacturing. The main difference is that one doesn’t see the sky as falling, while one does.
Time will tell. Personally, I am looking forward to America First. To a certain extent, we’ve been sold out with the globalist agenda ever since China joined the WTO.
President-elect Trump’s pick for Labor secretary has organized labor cheering and business groups sounding worried https://thehill.com/business/5012478-trump-labor-secretary-chavez-deremer/
The manufacturers surveyed are likely to be painting a grimmer picture than is actually the case. When they’re trumpeting their profits to their shareholders, they talk a good game. But when they’re talking to the general society they like to ham it up with their injuries and pains, like poorly acting soccer players taking a “hit” on the field.
You can read more of my writings by going to: dark . sport . blog … on the net.
Number three is a positive. Americans will learn that they don’t need all the junk they are buying and that includes both food and goods. This comment also address how American consumers will reduce the impacts of Tariffs and the Tariffs rates will not be directly passed on to consumer. Producer will have to lower prices if they want to sell the quantities they are use to selling!
This is deflationary as producers will have to lower prices to get people to buy their “Junk”.
Yeah, you can’t on the one hand complain about materialistic consumerist overconsumption, and the environmental impact of it, and in the same breath, moan about a collapsing economy because people are no longer buying as much crap.
The tariff threat is curious, but of course it will drive behaviour. I had some trading success,
and I bought a lovely .243 caliber rifle (made in USA), a really beautiful stereo amplifier (made In USA), and a Fender Telecaster guitar (actually made in Mexico). I live in Canada, which will be damaged tariffs, and our dollar is weak and tiny – a little “dollarette”, so we acquire USA products when we can. But the whole situation is comical – almost “theatre of the absurd” level. If Trump does 25% tariffs on Cdn imports, he will just hammer-whack the USA auto industry. It’s shooting at your own feet. We will be fine. We trade with the Swiss and the Japanese. And we have more oil and “yellowcake” than we ever can use. The USA tariffs will just harm USA business. Really.
– M.
We’re hoping Trump won’t tariff the oil and yellowcake that is imported from Canada.
Who needs manufacturing when we have AI?
AI is good at generating government statistinks.
The only manufacturing I want is an AI generated utopian world like opposite The Matrix
Wakanda with a permanent woke democrat one-party state!
Biden Admin was 4 years of lies, not only about Hunter pardon but all the economic stats
It was a mixture of lies and dementia – some of it you can put down to general cluelessness. Not saying there weren’t overt lies, but the other major components were dementia-related babbling, and then run-of-the-mill village idiocy in politicians.
Electric cars don’t sell. So what else is new?
Wait until they start flying and have lasers and shit.
I’ll just re-iterate my usual warning, fixed income folks are going to be in a world of hurt. Trump will take the blame but it was going to happen no matter what clown was in office.
https://www.aol.com/baby-boomer-living-1-470-090101613.html
“It’s turtles all the way down and inflation all the way up!”
Got exit strategy?
If inflation is way up then the Fed will increase rates.
And in part due to this particular report, the GDPNow forecast for real GDP growth in the fourth quarter increased today to a high 3.2% from an already above-trend 2.7%. Wow!
Inventory building (from the threat of tariffs?) can pull some sales and growth forward, but I would assume the GDPNow model accounts for how much of the inventory building is from foreign products (and thus not part of our domestic GDP)
“After the election, we have seen an uptick in customers wanting to come back to the U.S. for making their products. We are working through these inquiries. They seem very motivated.” [Primary Metals]
I’m sure this has nothing to do with the proposed tariffs.
#winning
Ultimately, if you want to build a business, you want law and order, a relaxed and predictable regulatory and fiscal environment, and ample supply of resources – both human and material, and the US hasn’t quite got that yet, but there’s hope at least.