From the steel-intensive “micro” demand perspective, WSD’s proprietary Steel Demand Indicator Monitoring System (SDIMS), which tracks steel-intensive components of U.S. industrial production, declined 1.1% year-on-year in June 2025. On a trailing three-month average basis, the index is down 2.0%, reflecting persistent weakness in capital goods and residential construction, alongside choppy automotive activity.
| USA Steel Demand Indicator Monitor System | ||||||
| June 2025 Report Momentum Overview | ||||||
| Index | June 2025 | Jume 2024 | Change Year-Over-Year | Near Term Momentum | Year/Year Momentum | |
| CES: Short Lead Time Capital Goods | ||||||
| Defense | 1,0% | 122 | 120 | 1,4% | -0,1% | 2,3% |
| Rail Infrastructure | 2,0% | 77 | 77 | 0,3% | -1,0% | 2,5% |
| Business Equipment | 4,0% | 96 | 94 | 2,3% | 0,8% | 1,9% |
| Heavy Truck | 5,0% | 87 | 112 | -22,9% | -1,3% | -25,1% |
| Drilling and Oil Wells | 5,5% | 104 | 104 | -0,3% | 0,0% | -1,9% |
| Durable Manufacturing | 10,0% | 101 | 100 | 1,0% | 0,3% | 0,8% |
| Fabricated Metals | 11,0% | 98 | 99 | -1,0% | 0,4% | -1,1% |
| Machinery | 11,0% | 100 | 98 | 2,2% | 0,0% | 1,7% |
| Total | 49,5% | 48,7 | 49,6 | -0,8% | 0,0% | -2,2% |
| CEL: Long Lead Time Capital Goods | ||||||
| Ship Building | 0,5% | 108 | 111 | -3,0% | 0,9% | -2,3% |
| Electric and Gas Utilities | 4,0% | 105 | 107 | -1,3% | -0,9% | 2,0% |
| Non Residential Construction | 23,0% | 172 | 170 | 0,8% | 0,5% | 0,6% |
| Total | 27,5% | 44,3 | 44,0 | 0,1% | 0,3% | 0,7% |
| CDIDX: Consumer Goods | ||||||
| Appliances | 3,0% | 98 | 98 | 0,3% | -0,3% | 0,4% |
| Residential Construction | 4,0% | 166 | 175 | -5,3% | -0,6% | -4,0% |
| Total Motor Vehicles Assembly | 16,0% | 98 | 99 | -1,1% | 4,5% | -6,0% |
| Total | 23,0% | 25,3 | 25,9 | -0,4% | 3,0% | -4,8% |
| Total | 118,2 | 119,5 | -1,1% | 0,8% | -2,0% | |
| Source: Federal Reserve Economic Data, WSD Estimates | ||||||
- Short lead-time capital goods remain the largest drag on steel-intensive production. Heavy truck manufacturing was particularly weak, down 22.9% y/y in June and 25.1% on a trailing three-month basis. However, some green shoots are emerging elsewhere in the capital goods sector: durable manufacturing rose 1.0% y/y, and the machinery segment posted a modest 2.2% gain.
- Among long lead-time goods, activity was mixed. Shipbuilding and the electrical and gas utility segments declined 3.0% and 1.3% y/y, respectively. These losses were partially offset by continued—albeit modest—growth in non-residential construction, which was up 0.8% y/y.
- The consumer goods segment declined 0.4% y/y, driven by reduced residential construction activity and sluggish automotive assemblies:
- Through the first six months of 2025, U.S. auto production has underperformed compared to the same period in 2024. Seasonally adjusted annualized assembly rates have averaged 10.4 million units, down from 11.1 million units in the first half of 2024. The decline was most pronounced in Q1, where assemblies averaged just 10.2 million units, compared to 11 million units in Q1 2024. However, the industry has shown signs of a modest recovery in recent months, with assembly rates gradually improving as the year progressed.
- In contrast to weaker production data, automotive sales have remained relatively strong, averaging 16.7 million units in the first half of 2025, up from 16.02 million in the same period last year. A major contributor to this surge was a sharp increase in sales during March and April, when monthly sales approached 18 million units. This spike was likely driven by consumer incentives and preemptive buying ahead of expected tariffs on automotive goods. By June 2025, sales had normalized to 15.76 million units, still above the 15.4 million units sold in June 2024. However, in July, auto sales increased sharply to a 16.7-million-unit rate on an annualized basis, up from the 16.3-million-unit rate reported for July 2024.
- One key consequence of this dynamic—declining production alongside healthy sales—has been a significant drawdown in automotive inventories. According to data from the Federal Reserve Economic Database (FRED), domestic auto inventories are down 16% year-over-year as of June 2025. While there has been some recovery from a near-term low of 193K units to 217K units in June, inventories remain well below the 247K-unit level recorded in June 2024. The imbalance between supply and demand has contributed to a tightening in the market, just as new cost pressures loom on the horizon.
- Looking ahead, WSD maintains a cautious outlook for the second half of the year. The implementation of tariffs on automotive components is expected to drive upward pressure on assembly and retail costs, which could constrain consumer demand—especially in an environment where the job market is showing signs of weakening. It is possible that the strong durable goods sales seen earlier in the year, including automobiles, were a front-loaded response to anticipated inflation, rather than a reflection of sustainable demand. While auto sellers have benefited from favorable conditions in early 2025, the outlook for auto production and sales in H2 appears more uncertain, with meaningful downside risks tied to higher input costs and softening economic conditions.
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