"There is one positive aspect when it comes to a dramatic drop as experienced in March and April of this year. When one has fallen that far there is nowhere to go but up! Since then there has been a steady improvement in almost every category." When one considers the challenging year 2020 has been thus far, and the dramatic hit the U.S. economy has taken due to the pandemic, this encouraging opening from the Industrial Heating Equipment Association’s (IHEA) Executive Economic Summary for the month of July is the bolstering news we all need to hear.
The report states, "The progress that has been made thus far has been contingent on several factors. The first is that many businesses have engaged in rebuilding their inventories in anticipation of an eventual economic recovery...hopes lie in a rebound by the fourth quarter. The second major motivator for recovery has been the willingness of the consumer to return to old habits as far as consumption. This has been a mixed experience as there has been some return to those old habits, but there have also been many new habits formed and these have all had their impact on business."
An uptick is evidenced in all but one of the measures and "even this showed only a very slight decline from the month prior." The summary also reports that "Of the twelve index readings tracked, all but one trended positively and in some cases the numbers registered this month were better than they have been in over a year."
The summary shared, "The more interesting data was found in those categories that seemed to have fully recovered and even exceeded levels seen earlier this year and at the end of 2019. The New Orders Index from the Purchasing Managers’ Index was back to the 60s and that is a level that has not been seen in over a year. Given that the new orders sub-index is the forward looking part of the overall PMI, it bodes well for the recovery at the end of the year." Other areas that showed a jump was in transportation that always "provides some confidence about the future," the parcel delivery sector (not those tied to imports or exports, however), and the metals market, especially copper and aluminum. Lastly, "The production indicators such as durable goods and factory orders have shown progress as business tries to rebuild inventory levels but there is ongoing concern regarding new demand."
Of those indices that trended positively, "the majority remain distant from the readings that dominated at the start of last year." However, the data shows "a solid recovery in many areas." Albeit, it will take time before you can describe it as robust.
Steel consumption was the only reading that did not trend upward, however, it still was stable and looked similar to the previous few months.
The summary concludes, "The bottom line is that there is resilience in the economy despite the trials of the last few months. It now all depends on whether the pandemic necessitates a wider crackdown and a resumption of the conditions that collapsed the economy in the first place."
The report is available to IHEA member companies. For membership information, and a full copy of the 12-page report, contact Anne Goyer, Executive Director of the Industrial Heating Equipment Association (IHEA). Email Anne by clicking here.
