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May 2020 Insight Guide: Market Indicators

The Economy

The U.S. economy cut a record 20.5 million jobs in April, while the unemployment rate climbed to 14.7%, as the coronavirus pandemic forced businesses across the U.S. to temporarily shut down and lay off workers.

Key Indicators

The Architectural Billings Index fell by 20.1 points to a score of 33.3 for the month of March. This is the largest single-month decline in the index’s 25-year history. A score below 50 indicates a decline in billings.

The April Purchasing Managers Index registered at 41.5%, down 7.6 points from March. The New Orders Index registered 27.1%, a decrease of 15.1 points from the previous month. The Production Index fell 20.2 points to 27.5% for March.

The energy market evaporated in late March and April, as demand dropped more than 30%, domestic supply peak, and Saudi Arabia and Russia decided to engage in an oil price war. The result collapsed oil prices and sent West Texas Intermediate oil prices negative for the first time in history on April 20th, as traders couldn’t find storage for the produced oil and had to pay buyers to take it.

The Steel Industry

COVID-19 has had an undeniably large impact on commodities markets, including the ferrous supply chain. The most significant impact is the increasing disarray in price correlations between various segments of the ferrous supply chain after the COVID-19 pandemic began. To learn more about COVID-19’s impact on the steel industry, view the Market Insight Guide below.

Contact your local sales representative to learn more.

Metalwest Market Insight - May 2020
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April 2020 Insight Guide: Market Indicators

The Economy

Initial filings for unemployment insurance in the U.S. totaled a record 6.648 million for the week ending March 28. That more than doubled the prior week’s reported total that was also marked a high record at the time. Economists at Bank of America Global Research believe that, even though the current labor market fallout from the COVID-19 economic hard-stop the U.S. is in has been the most severe so far, the broader economic downturn will result in the worst recession in modern U.S. history.

The U.S. suffered a net loss of jobs for the first time in nearly a decade as a result of COVID-19. Employers lost 701,000 jobs in March, the most since 2009. However, the shutdown from the coronavirus pandemic has already pushed around 10 million people out of work; most of those will not be recorded until the April unemployment report.

Industry Indicators

The Architecture Billings Index registered at 53.4 in February, reflecting an increase in design services. This is up from January’s reading and is expected to be negatively impacted in the coming months.

March’s Purchasing Managers Index registered at 49.1%, down 1 percentage point from the February reading of 50.%. The New Orders Index registered at 42.2%, down 7.6 points from the previous month. The Production Index registered at 47.7%, down 2.6 points compared to February.

Durable goods reflected increased demand for the third straight month for February as new orders increased 1.2% to $249.4 billion. Shipments of durable goods in February reversed a trend of 7 months of decreases by increasing 0.8% to $252.3 billion.

Oil production in the U.S. slowed and exploration has come to a standstill amid the COVID-19 pandemic. The trend has been seen worldwide. Currently, there is no clear end to the price slide, with some analysts forecasting that prices won’t increase until 2021.

The Steel Industry

Five major U.S. steel industry groups, including the American Institute of Steel Construction, American Iron and Steel Institute, Steel Manufacturers Association, the Committee on Pipe and Tube Imports, and Specialty Steel Industry of North America, strongly urged Congress to include significant infrastructure funds in the next stimulus bill. The letter from the the industry groups reiterated that 38% of America’s bridges are in need of replacement or repair.

For more information, contact your local sales representative or view the April 2020 Market Insight Guide below.

Metalwest Market Insight - April 2020
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March 2020 Insight Guide: Market Indicators

The Economy

The U.S. services sector activity jumped to a one-year high in February. This suggests strength in the economy before escalation of recession fears were ignited by the coronavirus epidemic that prompted the emergency interest rate cut from the Federal Reserve. Rates were cut by a half percentage point to a target range of 1.00% to 1.25%, the first emergency rate cut since 2008.

February added 273,000 jobs while the unemployment rate was at 3.5%, matching its lowest level in more than 50 years. Tied with January, the February gains tied for the best month since May 2018.

Industry Indicators

The Architecture Billings Index registered at 52.2 in January, up from the revised 52.1 in December (any score above 50 indicates an increase in demand for design services).

The February Purchasing Manager’s Index registered at 50.1%, down 0.8 percentage points from January. The New Orders Index registered at 49.8%, a decrease of 2.2 points from the previous month. The Production Index registered at 50.3%, down 4 points compared to January.

The Steel Industry

Shares of U.S. steel companies are suffering amid the coronavirus outbreak. The virus has taken a toll on most commodities due to a slowdown in demand in China. Shares of major domestic steel makers have tanked. This on top of the weaker prices, slowed steel demand, and the trade war in 2019, have dealt a huge blow to the U.S. steel industry.

A hearing of the Congressional Steel Caucus was held on March 5, 2020. Witnesses testified that any weakening in the enforcement of the Section 232 tariffs on steel imports might lead to lower prices on steel products. This would lead to seriously adverse effects on U.S. steel producers in an already vulnerable time for the industry.

For more information, contact your local sales rep or view the March 2020 Insight Guide below.

Metalwest Market Insight - March 2020