Manufacturing Shrinks for Ninth Straight Month, ISM Reports - Tariffs Undercut Sales and Hold Back Hiring
1. What Happened
The Institute for Supply Management (ISM) reported that U.S. manufacturing activity declined for the ninth consecutive month. The November Manufacturing Index came in at 48.2%, down from 48.7% in October. Any reading below 50% indicates contraction. Executives cited higher tariff-related costs, trade-driven uncertainty, and the recent federal shutdown as leading factors affecting production, new orders, and overall business conditions.
2. Who’s Affected
The downturn is impacting manufacturers across a wide range of sectors, especially companies dependent on importing or exporting intermediate goods. Tariff-sensitive industries—such as electrical equipment, consumer goods, and small-scale manufacturing—reported rising costs, workflow disruptions, and hiring constraints.
3. Why It Matters
The toy and hobby industry depends on predictable import flows, stable pricing, and steady consumer demand. ISM respondents noted that tariffs are increasing costs and complicating border processes—challenges already familiar to hobby importers and distributors. When tariff pressure raises landed costs, downstream prices rise and demand softens first in discretionary, price-sensitive segments such as model railroading, R/C products, and plastic kits.
4. What’s Next
ISM’s data points toward continued economic softness heading into early 2026. No immediate federal policy shifts were noted in the report, but agencies are expected to continue reviewing tariff impacts and broader supply-chain disruptions. Further examination of tariff policy may occur as conditions evolve and industry feedback is incorporated.
5. What It Means for Hobby Companies
Hobby importers and distributors may see higher landed costs, slower inbound shipments, and reduced seasonal demand. Small retailers—already operating on narrow margins—may feel pressure from both rising wholesale costs and softer consumer spending. Companies may need to reassess purchasing cycles, pricing strategies, and inventory positions in response to the sustained contraction signals.
Source:
MarketWatch / Institute for Supply Management reports, December 1, 2025, excerpts provided by the user.
