Worst of Coronavirus Is Yet to Come for U.S. Factories
Supply-chain disruptions from the Covid-19 outbreak are already taking a toll, but the data isn't yet reflecting the potential hit to demand.
On-the-ground dynamics for U.S. factories are more stressed than the headline numbers suggest.
Photographer: Qilai Shen/BloombergThe worst of the coronavirus is yet to come for U.S. factories.
Data released Monday by the Institute for Supply Management showed manufacturing activity hovered just above the borderline between an expansion and contraction in February. No matter how you look at it, that’s a downshift from a January read that showed an uptick in production and new orders after a trade-war lull. But the on-the-ground dynamics for U.S. factories are more stressed than the headline number of 50.1 would seem to suggest. Notably, supplier delivery times stretched to the longest since 2018. While that’s typically a positive indicator showing parts makers are struggling to keep up with demand, in this case it shows the distortion already happening to supply chains as governments and companies pursue drastic measures to try to stem the spread of the Covid-19 respiratory illness that’s already killed more than 3,000 people.