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IndustryNet Blog

The Big Picture Report on U.S. Manufacturing Conditions (July 2020)

Posted by IndustryNet on Tuesday, July 21, 2020

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U.S. manufacturing business conditions continued to improve in June, with several new reports released in July pointing to a steady climb back from historic losses triggered by the global pandemic.

At MNI, we’ve continued to see increased sourcing activity on our industrial marketplace IndustryNet showing searches for domestic parts and supplies trending up over this time last year.

Today, we’re rounding up all of the relevant economic reports on manufacturing released in July to bring you the big picture overview of business conditions at present.

Manufacturing Output Continues on Upward Trend

During the height of the economic shutdown, industrial production posted declines lows not seen since the Federal Reserve started collecting data 101 years ago. Starting in May, however, industrial production began to climb back.

June’s industrial production report, out July 16th, found that total industrial production shot up 5.4% in June as more manufacturers restarted production. This is up significantly from May’s industrial output report, which found a 1.4% rise in production.

The Federal Reserve notes, however, that output is still well below pre-pandemic levels: 10.9 percent, to be exact.

The industrial production index is a composite that includes manufacturing, mining and utilities. Taken alone, manufacturing output edged up 7.2% in June, with increases seen across the board.

Taking a closer look at specific industry data provided by the Federal Reserve, manufacturing output gains were led by motor vehicles and parts production, increasing 105% in June. The industry has seen significant gains in the past two months, but still stands 25% below pre-pandemic lows.

All other industrial posted output gains in June, with durable goods manufacturing posting an edge (+11.6%) over non-durable goods manufacturing (+3.4%). Most notably, production shot up 10.3% in apparel and leather; 8.7% in plastics and rubber; 6.4% in machinery; and 5.6% in computer and electronic products.

Manufacturing Employment Bumps Up

In June, we saw another hopeful employment summary from the Bureau of Labor Statistics. Overall, the U.S. added 4.8 million jobs in June, and the unemployment rate fell to 11.1%. This included a gain of 356,000 jobs in manufacturing, adding to the 225,000 jobs gained in May.

Job gains in manufacturing cut across most industry sectors, but as with industrial output, motor vehicle and parts production led gains in June. That sector added a whopping 195,000 jobs. Other notable gains included miscellaneous durable goods (+25,000); plastics & rubber (+21,000) machinery (+17,000) and furniture/fixtures (+12,000).

Just one sector posted a loss in employment: petroleum and coal products, which shed 1,500 workers.

Manufacturing Activity Rockets Back to Expansion

The ISM’s June report on business dazzled us all, with the much-watched index rocketing back into expansion after hitting lows not seen since the Great Depression in April.

For the first time in months, the ISM’s manufacturing activity index rose above 50, expanding at its fastest rate since 1980.

Most notably, new orders soared 24.6% to a level of 56.4% and production skyrocketed 24.1% to 57.3%. And although employment contracted, it did so at a slower rate.

The ISM’s employment index hit 42.1%, up 10 percentage points from May’s reading.

New York Fed Survey Rebounds

The Empire State Manufacturing Survey, released by the Federal Reserve, is a much-watched index and trusted bellwether of U.S. manufacturing business conditions. That index, based on survey responses collected between July 2nd and July 9th, found manufacturing activity has finally increased after sitting well below expansion for months.

The index rose to 17.2%, its first reading above “0” since February of this year.

The Fed reported increases in new orders and shipments, while unfilled orders were steady and employment unchanged.

The one troubling spot in the Fed’s New York survey was the optimism index. Optimism among manufacturing executives had increased in May, only to fall 18 points in June.

That index now stands at 38.4, which means executives are still optimistic about future business conditions, but not as optimistic as they were in May.

Industrial Solutions for Changing Times

At MNI, our mission is to help U.S. businesses thrive, providing tried-and-true prospecting and procurement solutions since 1912.

Powered by trusted MNI data, IndustryNet is an industrial marketplace that connects industrial buyers with 400,000 U.S. manufacturers and suppliers of more than 10,000 types of products and services. Set up a free account, search for suppliers, send quote requests and more with this free industrial marketplace.

IndustryNet is also a direct path for U.S manufacturers to increase their visibility among domestic procurers. Learn more about our marketing solutions.

Looking to expand into new markets? MNI also makes it easy for industrial companies to find new customers. Click here to learn about how an IndustrySelect subscription can help you develop and contact the most relevant prospects for your product. 

 

 

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