US manufacturing was adversely affected for a third consecutive month in May by the COVID-19 pandemic.
According to the Institute for Supply Management (ISM), the country’s PMI last month rose to 43.1pc from 41.5pc in April, but despite showing some signs of recovery, the US economy still contracted.
Demand tapered in May, as did prices, albeit at a slower rate, and although essential indexes showed improvement, the overall outlook for the quarter is negative.
Some factories began production late last month, but demand remains uncertain and will likely keep impacting inventories, employment, imports, and backlogged orders. Primary metals, transportation equipment, fabricated metal products, and machinery were among 11 industries that reported declining month-over-month revenues in May.
Last month, the New Orders Index registered a 4.7pc increase to 31.8pc from April, while the Production Index rose by 5.7pc to 33.2pc.The Backlog of Orders Index reached 38.2pc in May, rising marginally by 0.4pc from the pervious month, and the Employment Index increased by 4.6pc to 32.1pc.
The Inventories Index reached 50.4pc in May, rising by 0.7pc from April; the Prices Index rose by 5.5pc to 40.8pc; the New Export Orders Index increased by 4.2pc to 39.5pc; the Imports Index registered 41.3pc, decreasing by 1.4pc; and the Supplier Deliveries Index decreased by 8pc to 68pc.
In the pipe steel market, which affects many aspects of the manufacturing supply chain, the latest Baker Hughes rig count showed the US had 301 oil and gas rigs on May 29, 2020, which decreased by 17 rigs, or 5pc, form the previous week. The rig count contracted by 69pc, or 683 rigs, from 984 rigs on May 31, 2019.
The active rig count indicates how strong demand is for products used in drilling, completing, producing, and processing hydrocarbons. The historical low signifies there will be low steel demand from the oil and gas industry for the next year.