Layoffs at U.S. factories stood at the highest levels since the 2009 financial crisis, according to a new report. The analysis excludes the Covid-19 pandemic.
Concretely, S&P noted that even though the manufacturing index showed better-than-expected results in June, it was largely a result of inventory build. Manufacturers have reduced their headcount in three of the past four months, seeking to reduce costs and concerned about demand.
"While there is better news from the manufacturing sector, we remain concerned as factory growth continues to be temporarily buoyed by inventory building amid supply fears. Supply delays grew more widespread in June," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
"Factory job cuts are running at the highest since 2009 if the pandemic is excluded, reflecting concerns over the sustainability of the recent upturn in demand alongside worries over the escalating cost of raw materials," Williamson added.
He also noted that the survey "signals that current output levels are consistent with the economy struggling to grow much faster than a 1% annualized rate in the second quarter." The outlet recalled that the U.S. economy grew at a 1.6% annualized pace in the first quarter of the year and at 0.5% rate in the second quarter.
CNBC noted that, despite concerns about manufacturing employment, there are 23,000 more people employed in the industry this year, according to the Bureau of Labor Statistics. The manufacturing "flash" reading for its purchase managers clocked in at 55.7, up compared to May and above the consensus estimate from Dow Jones, which stood at 54.8. In the services side, the flash PMI was 51.3, also up compared to May and better than the forecast, 51.
