May sees further steep fall in output in U.S.Christian Fernsby ▼ | May 22, 2020
U.S. private sector firms reported a slightly slower rate of contraction of activity in May, as the economy began to reopen.
U.S. private sector Manufacturers and service providers indicated marked declines
Adjusted for seasonal factors, the IHS Markit Flash U.S. Composite PMI Output Index posted 36.4 in May, up from 27.0 in April, but nonetheless indicating the second-sharpest decline in business activity since the series began in late-2009.
The composite index is based on original survey data from IHS Markit’s PMI surveys of both services and manufacturing.
Rates of contraction among goods producers and service providers remained historically marked as only small sections of the economy returned to work amid ongoing measures to contain the coronavirus disease outbreak.
Although the overall contraction in new business eased in May, it was still the second-steepest in the series history.
Firms continued to report significant decreases in client demand as customers further postponed the placement of orders.
Service sector and manufacturing firms registered the second-sharpest reductions in new orders since the global financial crisis.
Foreign client demand remained especially muted, with new export orders decreasing substantially and at only a slightly reduced rate compared to April as lockdowns associated with the virus pandemic persisted across key export markets.
Reflecting the further severe drop in new business, firms cut workforce numbers at a marked pace in May.
The rate of job losses eased from April, but was nonetheless the second-fastest in the 11-year survey history.
Manufacturers and service providers recorded similar rates of decline as a lack of new work led to increased reports of lay-offs and lower working hours.
Subsequently, spare capacity rose and backlogs of work continued to fall.
Businesses remained pessimistic towards the outlook for output over the coming year as the pandemic’s impact was extended.
Although some became more confident of a pick-up in the later stages of the year, helping lift the survey’s future expectations index from April’s all-time low, others noted it would take a long time for conditions to normalise. ■