U.S. Business Activity Contracts Due To Coronavirus Outbreak

Matty-Sways

The coronavirus outbreak has put the services and manufacturing sector aggregately in a contractionary state.

IHS Market has designed and overlooks an index that measures activity in the business sector throughout the U.S. More specifically, they look at output in the services and manufacturing industries. The index score has fallen to 49.6, which is the lowest it has been since October 2013. Any score below 50 signals that the sector is contracting.

In China, the outbreak has affected manufacturing since quarantines and travel restrictions have prevented workers from being able to show up at work and, as a result, stall production. American companies rely on Chinese manufacturing to produce final products. Apple, for example, will not meet its revenue projections because of stalls in production.

However, the services industry is contracting, while manufacturing is just growing at a much slower rate. Drops in tourists coming from countries affected by the coronavirus outbreak could explain the contraction in the services industry.

“The deterioration was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions,” said Chris Williamson, who works at IHS Markit.

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