U.S. Manufacturing Output Declines Further in May Amid Pandemic
June 01 2020 - 10:42AM
Dow Jones News
By Dave Sebastian
Manufacturing output in the U.S. contracted at a slightly softer
but still severe rate in May as the Covid-19 pandemic led to lower
demand and new order inflows from both domestic and foreign
customers, a survey of the manufacturing sector said.
Data firm IHS Markit said Monday its U.S. manufacturing
purchasing managers index ticked up to 39.8 in May from 36.1 at the
start of the second quarter. The figure marked the second-steepest
deterioration in manufacturing operating conditions since April
2009 despite being higher than April's nadir, according to IHS
Markit.
With the exception of April's low, IHS Markit said the
contraction rate was the fastest since February 2009, with new
business falling for the third month running. Firms cut jobs at the
second-quickest rate in more than 11 years amid sliding sales, the
firm said. IHS Markit said output outlook turned negative for only
the second month since its data collection began in July 2012 for
the series.
Chris Williamson, chief business economist at IHS Markit, said
manufacturing remained in deep downturn for the month as measures
to contain the pathogen's spread led to production losses,
supply-chain disruptions and collapsed pricing power. He warned
that recovery could be slow, with job security and damaged balance
sheets denting consumer and business spending.
"With increasing numbers of companies restarting production, we
should see some improvements in the output trend in coming months,
and it was reassuring to see signs of the downturn already starting
to ease in May, suggesting April was the eye of the storm as far as
the production collapse is concerned," Mr. Williamson said. "The
recovery will of course also fade quickly if virus infections start
to rise again."
IHS Markit said the decline in foreign sales was the
second-fastest on record in May, and lower new order volumes led to
a decline in backlogs of work amid signs of excess capacity. Weak
demand led to lower input prices, and purchasing activity fell as
firms sought to leverage current inventories to cut costs, IHS
Markit said.
Write to Dave Sebastian at dave.sebastian@wsj.com
(END) Dow Jones Newswires
June 01, 2020 10:27 ET (14:27 GMT)
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