According to the Institute for Supply Management’s measurements of industry activity, U.S. manufacturing held on to growth in February.
The ISM reported March 2 that the manufacturing sector managed to grow in February 2020, but at a much slower rate than the month before. February’s PMI was 50.1%, which indicates expansion but at a lesser rate than January’s 50.9%. January marked the first expansion of that figure since July 2019. Timothy Fiore, chair of the ISM business survey committee, said comments from the CEO panel continued to be “positive,” as they were last month, but more cautious than before.
A handful of surveyed CEOs noted that challenges from the COVID-19 outbreak impacted their February numbers. According to one CEO, the virus is “wreaking havoc on the electronic products industry.” That CEO as well as a surveyed machinery executive mentioned efforts to source parts from outside of China in order to soften the blow. Executives in the chemicals, food and beverage, petroleum and coal, and fabricated metal industries all expressed worry about what that coronavirus is already doing to their supply chains.
The ISM’S new orders index fell to 49.8% in February, down 2.2 points from the month before. According to Fiore, orders from the computers and electronics, fabricated metal products, and food and beverage industries all grew. “Transportation equipment and petroleum & coal products continue to be challenged,” he said.
Production continued to grow in February, but at a slower rate: the index registered the production index at 50.3%, 4% lower than January. Of 15 industries, 12 reported growth: sectors with decreased production in February were apparel, leather & allied products; nonmetallic mineral products; and transportation equipment.
In commodities, capacitators, resistors, hot-rolled steel, and steel product prices rose, while aluminum, aluminum products, copper, corrugate, natural gas, polypropylene, scrap, hot rolled and stainless steel prices fell. Hot-rolled steel prices and polypropylene both continued their price trends, rising and falling for a fourth consecutive month, respectively. Natural gas’ price continued to fall for the third straight month. The prices index increased 7.4 points to 45.9%. There were no commodity shortages.
Employment across industries continued to contract, but at a slightly slower rate, continuing a seven-month trend. Food and beverage, computer and electronics, and plastics and rubber companies reported employment growth. Half of all industries surveyed reported a decrease of employment, and a quarter reported no change.
A repeat loser across ISM indices is the transportation equipment sector. In February, that industry recorded fewer orders, lower production, and less employment. Notably, though, transportation equipment was the only sector to report higher customer inventories in February: 11 others reported their customers’ inventories were too low. In January, the transportation equipment CEO surveyed said they saw “continued signs of slowdown in manufacturing. In February, the quoted CEO said simply, “Layoffs are here.”