March 02, 2020
The Institute for Supply Management’s Purchasing Managers’ Index for manufacturing fell to a reading of 50.1% in February from 50.9% in January. The report is based on survey data from purchasing and supply executives nationwide, several of whom cited concerns about the coronavirus.
“Comments from the panel were generally positive, with sentiment cautious compared to January,” said Timothy Fiore, chair of the institute’s Manufacturing Business Survey Committee. “The PMI remained in expansion territory, but at a weak level.”
Readings above 50 indicated expansion.
The ISM’s report included comments from several executives on the coronavirus:
- “There are always supply chain challenges with Lunar New Year shutdowns, and this year is no different. Coronavirus is wreaking havoc on the electronics industry. Companies are delayed in starting up production, which is resulting in longer lead times, constraints and increased pricing,” said a purchasing executive in the computer and electronic products industry.
- “January started out strong, but the effects of the virus in China [and] the continued grounding of the 737 Max have suppressed new orders,” said a purchasing executive in the chemical products industry.
- “Coronavirus continues to be front and center as a major supply chain risk to our company. Access to information in China — from our supply base and customers — is slow to come by,” said a purchasing executive in the fabricated metal products industry.
In addition, the employment portion of the index rose to a reading of 46.9 in February from a reading of 46.6 in January. It marked the seventh month of employment contraction, but at a slower rate compared to January.
However, Daniel Zhao, economist and data scientist at Glassdoor, tweeted the ISM report does not appear to include the full impact of the coronavirus.
Concerns in the staffing industry include buyers reducing use of workers because of inability to get materials from China. Some staffing firms have also listed coronavirus among business risks in their annual reports.
