U.S. Manufacturing Shows Signs of Recovery but Not All Subsectors Will Fare Well
Financial advisor Capstone Headwaters released its Industrials & Manufacturing Update today, reporting that after a three month decline, the industry showed signs of slight recovery in May and June. Coronavirus-induced production losses, disruptions in domestic and international supply chains, and job losses pushed the industry into decline, according to the report.
Capstone Headwaters said amid the pandemic, leading industry players and private equity firms in the industry focused on protecting their employees while continuing production, creating redundant production facilities in case primary facilities went down, procuring funding beyond government-related financing and delaying investment in M&A until the market stabilizes.
Companies that provide products and services to the commercial aerospace, automotive and oil and gas markets have been the hardest hit. On the other hand, providers to the defense, medical, food and beverage, and select chemical markets have seen sustained demand throughout the pandemic, according to the report.
“As companies begin to restart production and social distancing measures are reduced, we should see industry activity begin to climb, though the road to recovery is expected to be slow with several subsectors faring much worse than others,” Capstone Headwaters said. “The headwinds created by COVID-19 have yet to be broadly realized and are expected to be more closely scrutinized as a new normal emerges.”
Revenue for the manufacturing industry is expected to decline 10.3% in 2020, according to the Institute for Supply Management.