According to the Metal Industry Indicators report released by the US Geological Survey (USGS), the US primary metals leading index decreased for a second consecutive month in June this year, and its six month smoothed growth rate slipped into negative territory. The US economic recovery had been supporting domestic primary metals industry activity with moderate metals demand from the manufacturing sector in the first quarter of year. However, this sector slowed its metals consumption in the second quarter. The construction sector, with robust home building activity, continues to generate moderate metals demand. Moreover, slow global economic growth continues to reduce demand for US metals and metal products.
The steel leading index for the US decreased 0.4 percent in May this year, the latest month for which it is available, to 111.1, from a revised 111.6 in April. Its six-month smoothed growth rate decreased to 0.9 percent from a revised 1.7 percent.
The USGS report points out that, although the steel leading index growth rate has generally remained positive, it does not indicate that an upturn in steel industry activity is likely in the near term. However, slow manufacturing growth globally could prevent a recoveryin the steel industry.
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.