Manufacturing Update: Slowdown a Concern for 2020

The growth of manufacturing in the U.S. is slowing, and on a single-month basis the ISM index became negative in August. This does not bode well for the balance of 2019 or for 2020, according to Steel Market Update’s analysis of 11 manufacturing indicators. 

This report summarizes 11 data streams that describe the state of U.S. manufacturing in general and the steel industry in particular. We have reported on most of these separately in our Steel Market Update publications, and therefore will be brief in this summary. We don’t expect these data sources to all point in the same direction. Our intent in summarizing them in one document is to provide a consensus of the state of this critical steel consuming sector. In data released in September, the year-over-year growth rate of six of the 11 data streams was negative on a three-month moving average (3MMA) basis. Figure 1 is a summary of September’s data and shows the year-over-year change on a 3MMA basis. This month we have expanded the summary sheet to show directional arrows comparing September data releases to August data. On that basis, three of the indicators improved, seven deteriorated and one was unchanged. Based on American Iron and Steel Institute estimates of steel mill shipments by market classification, almost 50 percent of the steel consumed in the U.S. is manufacturing-oriented. This breaks down to about 27 percent in ground transportation, 9 percent in machinery and equipment, 5 percent in appliances, 4 percent in defense and about 4 percent in containers.