According to the Metal Industry Indicators report released by the US Geological Survey (USGS), the US economic recovery is supporting the growth of activity in the primary metals industry with modest metals demand from the manufacturing and construction sectors. However, slower economic growth in Asia and Europe has resulted in reduced demand for US metals. The steel leading index for the US increased by 1.7 percent in September this year, the latest month for which it is available, rising to 109.7 from a revised 107.9 in August. Its six-month smoothed growth rate dropped to -1.6 percent from a revised -4.9 percent in August.
Upturns in the steel scrap price growth rate and the PMI and a longer average workweek in iron and steel plants had a positive impact on the steel leading index. In contrast, declining light truck and car sales made a negative contribution to the leading index. The USGS report points out that the negative steel leading index growth rate indicates that US steel industry activity growth could decline further in the near future.
Note: Composite coincident indexes for the metal industries consist of indicators for production, shipments, and total employee hours worked. A growth rate above +1.0 percent is usually a sign of an upward near-term trend for future metals activity, while a growth rate below -1.0 percent indicates a downward trend.