SINGAPORE, SG / ACCESS Newswire / September 5, 2026 / Industrial production readings and sharply divergent purchasing managers’ surveys point to structural weakness across American factory activity, with borrowing costs, tariff pressure and softer export demand together reshaping industrial risk.

United States factory activity presents one of the more awkward readings in the global economy over recent months, with survey measures and official output data telling different stories about the same industrial base. Merifund Capital Management treats the deterioration across manufacturing indices as a material development for institutional portfolios, rooted in structural pressure rather than the ordinary noise of a monthly series. Elevated borrowing costs, an unsettled supply chain and softer overseas demand emerge as the principal forces at work.

Institute for Supply Management figures record the Manufacturing PMI at 47.9 in the closing month of last year, down from 48.2 a month earlier and the weakest print of that year. Contraction extends to a tenth consecutive month, with 85% of manufacturing output in decline that month against 58% in the one before, and only one of the six largest industries registering expansion. Breadth of that kind determines how durable a downturn proves.

The weakness spreads across several demand channels at once rather than concentrating in one corner of the sector. New orders come in at 47.7 in the same month, a fourth consecutive decline, whilst backlogs remain in contraction at 45.8 and imports fall to 44.6 as procurement thins. Employment sits at 44.9 that month, consistent with headcount management rather than hiring, while the prices measure holds at 58.5 for a second consecutive month as input costs continue to climb.

Official output data complicates that picture rather than resolving it, which matters for anyone allocating capital to the sector. Federal Reserve figures show total industrial production up 0.2% on the most recent monthly release and 1.1% above the level a year earlier, with manufacturing matching that pace. Capacity utilisation edges up to 76.3% yet remains 3.1 percentage points below its long-run average, and consumer goods production falls 0.4% over the month even as business equipment climbs 0.8%.

The S&P Global measure tells a different story again, registering 53.9 in the most recent month after an upward revision from a flash estimate of 53.2. That reading extends expansion to a twelfth consecutive month, though output growth eases to its slowest pace in five months. The gap between the two survey series amounts, in the reading of the Director of Private Equity at Merifund Capital Management Pte. Ltd., Anthony Saunders, to “the clearest evidence yet that American factory activity has stopped moving as a single block”, a divergence that rewards precision over broad sector calls.

Several structural forces combine to produce the weakness, with the cost of money at the front of the queue. Rate increases from the Federal Reserve over recent years bear more heavily on capital-intensive industry than on most of the economy, prompting manufacturers to put off equipment purchases and plant expansion. Supply chain disruption from the pandemic hardened into a chronic constraint; average effective tariff rates now stand at 20%, a level unseen since before the Second World War, and automotive producers face part-specific duties as high as 72%.

Weakening external demand compounds the problem, with foreign economies slowing whilst domestic consumers redirect expenditure towards services rather than durable goods. Export orders weaken further as capital investment stalls and backlogs thin. The employment index falls to 43.4 on the most recent reading, its weakest level in six years, and the sector sheds 105,000 workers against the prior year, with smaller manufacturers on thinner reserves scaling back more sharply than larger competitors.

Manufacturing carries economic weight well beyond its share of national output, which is what makes these readings consequential rather than merely disappointing. The sector conducts roughly 70% of private business research and development at present, while providing only 10% of private employment. Aggregate labour productivity growth averages 1.3% a year across the most recent full decade, less than half the 2.8% rate of the decade before it, and payrolls close the preceding year with close to 70,000 fewer workers than a year earlier, a third consecutive annual decline concentrated in rural industrial communities.

Portfolio implications follow from the divergence rather than the headline weakness, since a sector moving at two speeds rewards selection over direction. Institutional investors continue to direct capital towards industrial property despite the broader contraction, and competition for logistics space intensifies. Quality exposure offers the more durable answer to a cycle that resists directional bets, and the framework Merifund Capital Management applies points towards operational durability rather than dependence on sustained industrial demand. “Investors who treat this as a single manufacturing story will mis-price it,” Saunders observes, whilst the survey measures point in opposite directions.

About Merifund Capital Management
Founded in 2010 and headquartered in Singapore, Merifund Capital Management Pte. Ltd. (UEN: 201024554E) is a leading hedge-fund manager whose work spans long-only asset and portfolio management, long/short equity, global macro, event-driven and systematic strategies. Derivatives are deployed to capture market opportunities while capital preservation, liquidity and risk control remain central, and environmental, social and governance factors sit within the firm’s process in line with demanding global sustainability standards. Its clients include accredited investors, family offices, foundations and endowments, with the range broadening to retail investors. Further analysis is available at https://merifund.com/insights. Media enquiries may be directed to Tao Yang at media@merifund.com or at https://merifund.com.

SOURCE: Merifund Capital Management Pte. Ltd.

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