The Real Economy Blog

Economic News from RSM

Home > Economics > Market Minute: Manufacturing sector to slow in second half

Market Minute: Manufacturing sector to slow in second half

by

The Conference Board’s Leading Economic Index implies that the broader manufacturing sector will slow into the second half of the year.

The index, a composite index made up of 10 economic indicators, tends to lead domestic industrial production by about six months and has looked soft since April.

Trade policy, tariffs and a weaker dollar, all of which are contributing to an increase in the cost of doing business, will weigh on both profit margins and inflation

A closer look at the index shows that the only thing holding it up are elevated valuations inside the equity market.

While we do not expect the domestic economy to roll over into inflation—we see a 40% probability of a recession over the next 12 months—a growth scare could come in October or November as tariffs and a weaker dollar begin to weigh heavily on manufacturing firms.

Related posts

About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

The Real Economy Blog