According to the Metal Industry Indicators report released by the US Geological Survey (USGS), the rebuilding after Hurricane Sandy will undoubtedly generate additional metals consumption. However, slower manufacturing growth in China and the recession in Europe have reduced their imports of US metals. The steel leading index for the US decreased by 0.7 percent in August this year, the latest month for which it is available, falling to 107.8 from a revised 108.9 in July. Its six-month smoothed growth rate dropped to -5.1 percent from a revised -4.1 percent in July.
The declines in the steel scrap price growth rate, and dips in new orders for iron and steel products and in the index for new housing permits exerted a negative impact on the steel leading index. In contrast, the boost in light truck and car sales made a positive contribution to the leading index. The USGS report points out that the deep 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.