U.S. manufacturing growth nears standstill amid coronavirus outbreak

Chinese employees work at Festo's manufacturing headquarters in Jinan, China, in October 2019. The coronavirus outbreak in China is significantly impacting U.S. manufacturing growth, data showed Monday. File photo by Stephen Shaver/UPI
By Don Jacobson U.S. manufacturing growth took a hit in February as fallout from the coronavirus outbreak in China disrupted global supply chains and negatively affected the sector's outlook.
Data from the Institute for Supply Management showed that while technically still expanding, manufacturing growth momentum was nearly at a standstill as the benchmark Purchasing Managers' Index slipped to 50.1 from 50.9 in January.
That was a significantly steeper drop than expected by analysts and marked the PMI's lowest level since late 2019, when it fell below 50 -- seen as the dividing line between expansion and contraction.
Production decreased by four percentage points to 50.3, while new orders for manufactured goods shrank 2.2 points to 49.8.
"Many respondents reported that their operations were impacted by the coronavirus outbreak," said Timothy Fiore of the Institute for Supply Management, citing the inability of U.S. manufacturers to get timely delivery of parts made in China.
Anonymous comments included in the report included a computer industry purchasing manager who said the outbreak was "wreaking havoc" on the electronics industry, with companies delaying production and seeking to dual-source production in the United States.
Travel restrictions imposed by governments to stem the outbreak were also blamed for the manufacturing downturn, with a respondent from the transportation industry saying, "layoffs are here."
Some analysts saw the manufacturing numbers as evidence that the U.S. economy is on a path to much slower growth until the outbreak is contained, with effects perhaps more severe than the U.S. trade war with China.
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March 02, 2020
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