The U.S. services sector activity jumped to a one-year high in February. This suggests strength in the economy before escalation of recession fears were ignited by the coronavirus epidemic that prompted the emergency interest rate cut from the Federal Reserve. Rates were cut by a half percentage point to a target range of 1.00% to 1.25%, the first emergency rate cut since 2008.
February added 273,000 jobs while the unemployment rate was at 3.5%, matching its lowest level in more than 50 years. Tied with January, the February gains tied for the best month since May 2018.
The Architecture Billings Index registered at 52.2 in January, up from the revised 52.1 in December (any score above 50 indicates an increase in demand for design services).
The February Purchasing Manager’s Index registered at 50.1%, down 0.8 percentage points from January. The New Orders Index registered at 49.8%, a decrease of 2.2 points from the previous month. The Production Index registered at 50.3%, down 4 points compared to January.
The Steel Industry
Shares of U.S. steel companies are suffering amid the coronavirus outbreak. The virus has taken a toll on most commodities due to a slowdown in demand in China. Shares of major domestic steel makers have tanked. This on top of the weaker prices, slowed steel demand, and the trade war in 2019, have dealt a huge blow to the U.S. steel industry.
A hearing of the Congressional Steel Caucus was held on March 5, 2020. Witnesses testified that any weakening in the enforcement of the Section 232 tariffs on steel imports might lead to lower prices on steel products. This would lead to seriously adverse effects on U.S. steel producers in an already vulnerable time for the industry.
For more information, contact your local sales rep or view the March 2020 Insight Guide below.