MNI INTERVIEW: ISM Head: Coronavirus Threatens Factory Rebound

--US Factory Index Has First Positive Reading in 6M

By Brooke Migdon

     WASHINGTON (MNI) - U.S. factory optimism that turned positive for the first

time in six months will be challenged by the coronavirus outbreak, the ISM's

survey head told MNI.

     The Jan. 15 "Phase One" trade agreement between the U.S. and China offered

a reprieve for manufacturers who felt the brunt of the tariff fight, but

uncertainty linked to coronavirus outbreak could erode some of the deal's

benefits over the longer term, Timothy Fiore said Monday. 

     The ISM manufacturing index rose to 50.9 in January, the first move above

50 and into positive territory since July. The previous reading of 47.8 was the

lowest since since the 2009 financial crisis. The growth outlook improved among

respondents in January's survey following the trade pact, with only one negative

comment for every 2.4 positive comments.

     "The message to the community is that, as far as China is concerned,

nothing else is going to happen between now and the election," in terms of a

trade war, he said. 

     The coronavirus outbreak wasn't captured in the ISM's January survey

period, and it will likely have a "strong impact" on further improvement in

February's report, he said.

     "Probably a lot of it is going to get washed away from the supply chain

disruptions from the Coronavirus and the significant pace at which it's

expanding around the globe and across China," he said. Supply managers will

likely rush to reroute supply chains away from China, according to Fiore.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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