But COVID expected to harm 3d quarter results
Washington. New data from the Coalition for a Prosperous America’s Reshoring Index (CRI) shows gains for U.S. manufacturing in the first half of 2020. The CRI Index—which tracks the overall success of America’s domestic manufacturing sector in supplying goods to the U.S. market—climbed by 1.73 percentage points in the first quarter of 2020, indicating that U.S. manufacturers gained share in the domestic market for manufactured goods. As a result, import penetration in manufactured goods fell to 28.9% in the first quarter, its lowest level since 2014.
In the second quarter, as COVID hit, U.S. manufacturing lost some of those gains. The CRI registered a loss of 0.45 percent as import penetration rose to 29.4 percent. At the end of the second quarter, import penetration remained 1.3 percentage points below the level at the end of 2019. The rise in U.S. producers’ share in the first half of this year over 2019 is largely due to the COVID-19 pandemic suppressing imports and restricting international shipping.
Said CPA Chief Economist Jeff Ferry, “In 2019, domestic U.S. manufacturing grabbed a larger share of the home market due to the China tariffs restricting imports, which we saw in reduced imports of primary metals, computers/electronics, and furniture. This year, both home production and import levels have been impacted by COVID, but we are nevertheless ahead in home market share. As the economy returns to normal next year, it will be very interesting to see if the U.S. can continue to gain market share in its home market.”
In 2019, the CRI registered its largest improvement in a non-recessionary year since 2000, the beginning of the measurement period. The CPA Reshoring Index, which is calculated from publicly available federal government data on domestic production and imports, also produces a figure for the balance of trade in manufactured goods. This showed a deficit of $794 billion in 2019. The manufacturing trade deficit for the first half of 2020 came in at $378 billion, virtually the same as the figure in the comparable period for 2019. The COVID-19 pandemic reduced manufactured exports by 17 percent, to $566.9 billion, and manufactured imports by 11 percent, to $944.9 billion.
CPA expects the third quarter Reshoring Index to worsen. US production weakened during that period of the pandemic while Chinese production recovered and imports surged to fill the gap. We will report on third-quarter results when the data is available.
“The CPA Reshoring Index provides an excellent indicator of whether or not the United States is reversing the tremendous damage suffered by America’s productive base over the last 20 years,” said Michael Stumo, CEO of the CPA. “Our first priority as a nation must be to recapture the more of the home market in manufactured goods—which is worth over $7 trillion a year—to fully recover from the pandemic, address income inequality and achieve broadly shared prosperity.”
Melissa Tallman, Marketing and Communications Director
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