Oregon’s economy continues to enjoy historic strength, with the jobless rate hovering around 4% and incomes growing rapidly.

One key segment, though, has cooled considerably – and that could be a worrisome sign for everyone else.

Manufacturing hours worked in the state are down sharply in recent months, to levels at or below hours worked in the years following the dot-com bust and during the Great Recession.

“Manufacturing suffers from a slump induced by slower global growth and trade disputes,” wrote University of Oregon economics Professor Tim Duy in his monthly report on the state economic indicators.

Fewer hours worked means that employers are running fewer shifts and less overtime, perhaps reflecting the costs associated with President Donald Trump’s trade war and the economic slowdown in China, the U.K. and in parts of Europe.

Oregon’s slowdown has been particularly steep, with manufacturing hours declining at nearly twice the national rate. That puzzles economists, who wonder if new state overtime rules or the bankruptcy of farmers’ cooperative NORPAC may be accelerating Oregon’s slide.

In general, though, Oregon appears on the same trajectory as manufacturing nationwide. September was the sector’s worst month since the tail end of the Great Recession in 2009, according to the Institute for Supply Management’s manufacturing index.

“Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019,” wrote Timothy R. Fiore, chairman of the Institute for Supply Management, when announcing the national September data.

“Overall,” he wrote, “sentiment this month remains cautious regarding near-term growth.”

Some economists have already declared a national “manufacturing recession,” an unofficial term that describes extended decline in that particular sector of the economy.

That doesn’t necessarily mean a broader recession is imminent. Many economic indicators, from the low jobless rate to the modest inflation numbers, remain healthy.

Manufacturing’s decline does indicate the economy is slowing and that industry is increasingly nervous about the outlook. Continued cutbacks could be a drag on the rest of the economy.

— Mike Rogoway | twitter: @rogoway | 503-294-7699