ll signs point to a double-digit decline in second-quarter real GDP in the United States. Even if growth quickly returns during Q3, the downturn will still be the worst since the end of World War II. For 2020 as whole, real GDP is projected to fall 8.1 percent in the U.S., say IHS Markit economists Nariman Behravesh and Sara Johnson.
Although deep, “this [c]ould be the shortest recession on record (back to the 1850s) in the U.S.,” according to the consultancy. On the other hand, Behravesh and Johnson predict “the recovery is likely to be a hard slog [because] the fallout from this pandemic and the lockdowns can only be described as massive. The economic and social costs continue to rise and will stay elevated for a long time.”
Meanwhile, U.S. Steel Corp. provided second-quarter 2020 guidance on June 17. Q2 was “significantly impacted” by the effects of COVID-19 and costs associated with idling a significant portion of steelmaking assets, President and CEO David B. Burritt stated. The company acted swiftly to adjust production to protect worker safety and to respond to declining orders from manufacturing customers.
However, “OEM restarts are progressing well and customer demand has started to return,” Burritt said. “We continue to evaluate our order book and regularly assess our footprint to remain nimble to meet changes in customer demand.”
The Institute for Supply Management’s Purchasing Managers Index, at 43.1 percent, rose slightly in May compared to April. The New Orders Index landed at 31.8 percent; the Production Index registered 33.2 percent; the Backlog of Orders Index registered 38.2 percent, and the Employment Index registered 32.1 percent, all up from April.
“The coronavirus pandemic impacted all manufacturing sectors for a third straight month. Although many manufacturers returned to work late in the month, demand remains uncertain, likely impacting inventories, customer inventories, employment, imports and backlog of orders,” said Timothy R. Fiore, who chairs ISM’s Manufacturing Business Survey Committee. Eleven industries reported business contraction during May, including primary metal producers and fabricators.
However, one surveyed metal producer reported, “Most of our customer base is considered to be a part of the critical workforce, so we have been running at around 80 percent of our normal production volume.”
A fabricator stated that it is ready to return to full production for automotive suppliers, depending on how quickly these customers ramp back up. “We have built up inventory to stock [and are] ready to ship.”
Commodity prices will likely lag the demand recovery, as was the case after previous recessions. During May, purchasing managers reported that selling prices for aluminum, copper, carbon and stainless steel products all remained down.
