U.S. Manufacturing Activity Edges Up from 11-Year LowPosted by IndustryNet on Monday, June 1, 2020
U.S. manufacturing activity recovered some lost ground in May, although the sector remains deeply mired in contraction, according to the Institute for Supply Management’s monthly Report on Business. According to the ISM, U.S. manufacturing activity edged up 1.6% from last month’s reading to a level of 43.1%, far below the 50% mark that indicates expansion. Production, new orders and employment continued to contract over the month, but at a slower rate than previous months. Raw materials inventory grew and exports and imports both contracted. Said Timothy Fiore, Chairman of the ISM: “Three months into the manufacturing disruption caused by the coronavirus (COVID-19) pandemic, comments from the panel were cautious (two cautious comments for every one optimistic comment) regarding the near-term outlook. As was the case in April, the PMI indicates a level of manufacturing sector contraction not seen since April 2009; however, the trajectory improved.” Growth industries included non-metallic mineral products; apparel, leather & allied products; food beverage & tobacco products; paper products and wood products. Of industries posting declines, printing & related support activities; primary metals and transportation equipment saw the sharpest losses. What U.S. Manufacturers are SayingSurvey responses from executives continued to be dominated by the impact of coronavirus, yet were far more optimistic than April's comments. Some comments reflect a recent report released by IndustryNet, which found that searches for industrial supplies and services surged on the industrial marketplace site in April. Said one manufacturer in the computer & electronic products sector: “Despite the COVID-19 issues, we are seeing an increase of quoting activity. This has not turned into orders yet, but it is a positive sign.” Other comments pointed toward a growing reluctance on the part of some manufacturers to rely on global supply chains, leading some to wonder if the coronavirus outbreak may spark a fresh reshoring movement. Said one machinery executive: “Getting out from under several suppliers being closed worldwide. Also, looking at what really needs to be in China.” Transportation equipment executives, operating in one of the hardest-hit industries, continued to express frustration. “We see an issue with suppliers that are affecting production. At the same time, social distancing measure in [the] manufacturing plant and customer demand are impacting the rate of production.” Another in the fabricated metals sector stated: “Returning to full production for automotive, ramp-up will still depend on speed of automotive start-ups. We have built up inventory to stock. Ready to ship.” Among the more encouraging comments was this from an executive in the non-metallic minerals sector: “We see a lot of positive signs, despite what’s going on. people seem to continue to be building and looking to projects for the fall of 2020 and beyond. There is good optimism out there.” New Orders Climb BackThe ISM’s New Orders Index increased by 4.7% in May, but the reading still sits at a historic low, registering 31.8%. Only four industries registered an uptick in new orders for May, led by textile mills; nonmetallic mineral products; food, beverage & tobacco products and paper products. Losses were most severe in printing & related support activities; transportation equipment and primary metals. Manufacturing Production Improves from Record Low2020 has been a roller coaster year for manufacturing production. After soaring nearly ten percentage points in January, the ISM’s production index eased back 4% in February to 50.3%; fell to 47.7% in March before diving 20.7% to a reading of 27.5% in April. April’s production reading hit its lowest point ISM survey began in January 1948 and represented the latest one-month decline since January of 1984. Furniture/related products; wood products; and food, beverage & tobacco products; and paper products were the only industries to report an increase in production for the month. Employment Contracting at a Slower RateThe ISM’s employment index also improved over last month’s reading. The ISM reports the employment index edged up 4.6% from April’s historic reading of 27.5%. The employment index now stands at 32.1%. Said Fiore “This is the tenth month of employment contraction, but at a slower rate compared to April. All six big industry sectors experienced strong employment contraction as a result of furloughs and layoffs due to a lack of new orders and stay-at-home directives. Employees returning to work in late May will positively impact the index in June.” Industries reporting an increase in hiring stood at just two: apparel, leather & allied products, as well as paper products. Printing & related support activities; textile mills and furniture saw the sharpest contraction in hiring for May. A Century of Industrial SolutionsAs providers of industrial information since 1912, MNI has seen the ups and downs of U.S. manufacturing, providing much-needed industrial information to our customers during the Great Depression, World War II, and beyond. We understand how much our customers rely on our industrial solutions for their everyday operations. At MNI, Our goal is to help your business thrive, so whether you’re looking to advertise your products and services to manufacturers, need to find new suppliers, or are looking to reach out to decision-makers in the manufacturing world, our industrial solutions are here to support your mission.
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