US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Manufacturing Finishes a Bad Year on a Good Note

When the COVID-19 first struck in early 2020, there was an extreme and near immediate negative impact on the global manufacturing sector. Uncertainty on how best to navigate this new reality, and on how long the world would be in the grasp of the pandemic, resulted in the temporary closure of nonessential businesses and a slowdown in general business investment. By April 2020, the PMI – a measure of economic trends in the manufacturing and service industries – reached its lowest point in a decade.

However, the world started to get back on its feet a few months later and steady gains in manufacturing activity through the second half of the year culminated in a December measurement that, in many countries, was the highest mark in years. Through most of 2020, the global manufacturing sector has shown that it was able to withstand many of the disruptions caused by the pandemic, though it was not a smooth journey:

  • The service industry has not recovered to nearly the same extent as manufacturing. Travel in particular – both business and personal – is still struggling, which has continued to hurt airlines, hotels, and restaurants, as well as industries that supply them.
  • Even within the manufacturing sector, the size of the recovery has varied considerably. In December, for instance, the Printing and Nonmetallic Minerals Products industries in the US contracted. Consumer goods producers also registered a weak December as consumer spending slowed.
  • Although it did show a recovery from the sharp drop in manufacturing activity early in 2020, the manufacturing sector in Japan continued to register contractions through nearly all of 2020 before flattening in December.
  • Input prices have risen sharply in some industries as supply chains evolved, production was shut down or limited by physical distancing, and demand changed.

One of the bigger issues early on in the pandemic was the disruption of supply chains as countries enacted different measures to combat the spread of the virus at different times. While there remain sporadic supply chain issues, the US has generally reported that there is stability among inventory levels and that supply chains are satisfying at least short-term demand requirements in many industries.

However, this improvement could still be upset by a resurgence in coronavirus cases if the rollout of the COVID-19 vaccine falters, upsetting normal supply chains and the ability of manufacturing facilities to operate at full capacity. In the second half of 2021, however, many of these challenges to manufacturing could be resolved if much of the world has the chance to be vaccinated and restrictions to movement and operations are lifted.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including Global Material Handling Equipment, Global Packaging Machinery, and Global E-Commerce Packaging. Related reports from Freedonia Focus include coverage of various US manufacturing and service industries, such as Fabricated Metal Products, Steel Mill Products, Audio & Video Equipment, and Employment Services. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

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