Factory-Sector Growth Retreated in October. Tariffs Could Be to Blame.

American factory activity decelerated in October, while an underlying gauge of activity in factories that make metal products contracted for the first time in about two years.

The Institute for Supply Management on Thursday said its manufacturing index fell to 57.7 in October from 59.8 in the previous month, the lowest level in six months. Readings above 50 indicate activity is expanding across the manufacturing sector, while numbers below 50 signal contraction. Sales of factory-made products and employment in the manufacturing sector continued to grow, but at a slower pace.

Meanwhile, activity in the industry that makes fabricated metal products—widgets like springs that help make larger goods such as washing machines—contracted for the first time since September 2016. New orders for fabricated metal products declined for the second month in a row in October.

Though overall demand remains moderately strong for American-made goods, the Trump administration’s steel and aluminum tariffs and retaliatory tariffs by foreign countries appear to be putting a damper on the manufacturing industry, and more specifically, the companies that make raw metals into intermediate goods.

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