For Immediate Release
Chicago, IL – October 1, 2020 – Today, Zacks Equity Research discusses Industrial Products, including Astec Industries, Inc. ASTE, Sealed Air Corporation SEE, Berry Global Group, Inc. BERY and Fortune Brands Home & Security, Inc. FBHS.
The COVID-19 pandemic adversely impacted the Industrial Products sector in the earlier part of the year. Factory closures worldwide owing to restrictions imposed by several governments, pandemic-induced supply chain disruptions, low demand for goods and volatility in the energy market crippled the sector.
The sector logged a decline of 18.3% in earnings in the first quarter of 2020 followed by a plunge of 35.3% in the second quarter, highlighting the slowdown in industrial production amid coronavirus crisis-hit demand. The sector is anticipated to witness a decline of 26% and a 17.6% in the third quarter and the fourth quarter, respectively, per our latest Earnings Trends report.
Sector Slowly Getting Its Bearings Back
Per the Institute for Supply Management, the Manufacturing Purchasing Managers’ Index (PMI) after posting readings of 50.9% in January and 50.1% in February slipped below 50 (which indicates contraction) to 49.1% in March. In April, it further contracted to 41.5% marking the lowest reading since April 2009. However since then, the sector has slowly resumed its recovery with 43.1% in May and crossed the 50 mark in June with a 52.6% reading. It has remained above 50 for three straight months now and was 56% in August — the highest so far in 2020.
This signals that the sector seems to be coming out of the crisis, aided by gradual resumption of the global economic activities and reopening of businesses. Of the 18 manufacturing industries, 15 reported growth in August. The New Orders Index registered 67.6% growth in August, up from July’s index of 61.5%. The Production