Some Encouraging Signs for the Manufacturing Sector

Like a lot of markets, the electrical industry has experienced a bumpy road in 2020. The impact of the COVID-19 pandemic has been felt by the vertical markets that are supported by the electrical supply chain. Along with energy and construction, the manufacturing sector is among the segments that have been hard hit by significant disruptions in typical demand cycles. For many manufacturers, these business conditions have shifted operational plans and triggered adjustments to yearly goals.

But the manufacturing shifts that have sent ripples throughout the supply chain could be short lived. U.S. Manufacturing is showing signs of bouncing back. The Institute for Supply Management, an association of Purchasing Managers, said in a recent report that its manufacturing index rose to 56.0% in August. This marks three months of consecutive growth dating back to an initial rebound in June where the index began its ascension into positive territory after a rough Spring. For reference, any PMI reading above 50 signals that U.S. manufacturing industry is expanding.

While the +50% June – August PMI data is encouraging, economists caution that the positive outlook could be clouded by the threat of repeated disruptions from potential coronavirus outbreaks in the fall season. However, Timothy Fiore, chair of the ISM manufacturing survey committee, recently shared some encouraging news that positive comments from the ISM’s recent manufacturing survey were running two-to-one ahead of more cautious comments from respondents.

The August ISM index also indicated an expansion in the overall economy for the fourth month in a row after a contraction in April, which ended a period of 131 consecutive months of U.S. growth. In addition to the ISM data, other positive signs of a manufacturing rebound are materializing. Indexes for new orders, production, order backlog, employment, and supplier deliveries are all trending in a positive direction. These are encouraging signs that bode well for the manufacturing sector in the back half of this year.

For context, of the 18 manufacturing industries, 15 reported growth in August (including Electrical Equipment). The three outlier industries that reported contraction were Printing & Related Support Activities, Petroleum & Coal Products, and Furniture.

At DWC, we’re well-stocked and able to support your manufacturing and industrial customers from our network of U.S. distribution centers. Contact your Account Manager today with questions or for quotes on a huge selection of specialty wire & cable products.