MANUFACTURING OUTLOOK
JUNE 2020
MANUFACTURING OUTLOOK by ROYCE LOWE
GLOBAL MANUFACTURING IS SHOVING ITS NOSE OUT OF THE HOLE, BUT ONLY SLIGHTLY. SPACE X SHOT UP THERE. TRUMP HAS A LOT ON HIS PLATE.
The COVID -19 virus continues to take an awful global toll, and is still causing humanitarian and economic havoc. There has been “opening up” but its effects are unknown at the moment. The BLS jobs report for May shows a gain of 2.5 million non-farm payroll jobs, with the unemployment rate at 13.3 percent. This reflects a limited resumption of economic activity, with employment up sharply in leisure and hospitality, construction, education and health services and the retail trade. Manufacturing gained 225,000 jobs, with the gains evenly split between durable and nondurable goods. There were gains in motor vehicles and parts (28,000), in fabricated metal parts (25,000) and in machinery (23,000). Construction jobs were up by 464,000, gaining back almost half April’s decline. Mining jobs continued to decline in May by 20,000, of which most, 16,000, were in mining support activities. Mining has declined by 77,000 over the past three months. The Bureau of Economic Analysis recently released its ‘second’ estimate for the annual rate of Real GDP growth in the first quarter of 2020, putting it at minus 5.0 percent. The figure for the fourth quarter of 2019 was 2.1 percent.
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Manufacturing Outlook / June 2020
The ISM PMI figure for U.S. manufacturing retrieved a little ground in May, moving from 41.5 percent in April to 43.1 percent in May. The overall economy returned to expansion after one month of contraction. IHS Markit’s remarks on the U.S. show weak demand leading to a significant decline in production and new orders, hence employment, along with the steepest drop in selling prices on record. COVID - 19 continues to disrupt supply chains. The IHS Markit PMI was at 39.8 percent in May, up from April”s 36.1 percent. There should be some improvement with companies restarting production, so perhaps this is the start of an upturn, which will undoubtedly be slow in the light of high unemployment, job insecurity and corporate losses, all of which will put a brake on consumer and business spending. U.S. LIGHT VEHICLE SALES The sales below for May 2020 are based on estimates, but are considered to be a good approximation of true figures. The total percent change for the month was minus 32.1 percent. The Seasonally Adjusted Annual Rate has been estimated at 11.8/12.2 million.
