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U.S. manufacturing reports show slight hope in long recovery ahead

By
Jean Lotus
U.S. manufacturing index levels are slowly growing again, after the national coronavirus pandemic reduced economic activity to the lowest levels since 2009, new reports show. Photo by jotoler/Pixabay
U.S. manufacturing index levels are slowly growing again, after the national coronavirus pandemic reduced economic activity to the lowest levels since 2009, new reports show. Photo by jotoler/Pixabay

June 1 (UPI) -- Manufacturing reports released Monday in the Midwest and the nation as a while showed a slight improvement that may signal the worst of the pandemic's economic downturn has passed in that sector.

While manufacturing contracted in May, the overall economy returned to a slight expansion after one month of contraction, the Tempe-Ariz.,-based Institute for Supply Management's May 2020 report said.

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Production, new orders, employment and supplier deliveries were slowing at a slower rate, the manufacturing survey company said, after dropping in April to the lowest rate since 2009.

The May combined index of manufacturing metrics registered 43.1 percent, up 1.6 percentage points from the April reading of 41.5 percent, the organization said. An index reading of below 50 indicates a contraction in the economic sector.

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Manufacturing represents about 11 percent of the total U.S. economy.

The pandemic in April ended a period of 131 consecutive months of growth, the ISM's report said.

"The coronavirus pandemic impacted all manufacturing sectors for the third straight month," said Timothy Fiore, the organization's chair, in a statement.

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"May appears to be a transition month, as many panelists and their suppliers returned to work late in the month. However, demand remains uncertain, likely impacting inventories, customer inventories, employment, imports and backlog of orders," Fiore said.

However, Fiore said winners and losers would exist in the post-pandemic manufacturing rebound.

Among the six biggest industry sectors, the only expanding industry category was food, beverage and tobacco products, he said. Sectors that continued to contract at "strong levels" included transportation equipment, petroleum and coal products and fabricated metal, Fiore said.

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Omaha-based Creighton University's May survey of mid-America manufacturers also showed slow improvement with an index of nine states improving to 43.5 in May from a low of 35.1 in April. A level of 50 is considered neutral.

More than one-third of firms surveyed had cancelled or amended contracts and another 34 percent had extended their period to pay outstanding invoices, the report said.

"This is a consumer-led recession with manufacturing lagging," Creighton economist Ernie Goss, who oversaw the survey, told the Minneapolis StarTribune. "Nonetheless, Creighton's survey indicates that the regional manufacturing sector is trapped in a recession."

Manufacturing supervisors were optimistic about the future, though, the Creighton survey showed.The survey's confidence index improved to 56.6 in May from April's 45.5 reported index.

The number of workers receiving unemployment benefits swelled to more than 1.3 million from 160,170 in mid-March, in Minnesota, North and South Dakota, Arkansas, Iowa, Kansas, Missouri, Nebraska and Oklahoma, Goss said.

Nationwide, about 21 million jobs have been lost due to the pandemic.

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