The Organization of the Petroleum Exporting Countries (OPEC) in its July Monthly Oil Market Report (MOMR) maintains its US 2020 economic growth forecast at minus 5.2%. The US GDP growth is forecast at 4.1% in 2021, assuming that COVID-19 will be contained and consumption and investments increase, driving a strong recovery from a significant slowdown this year.
However, COVID-19 infections are resurging in the US, causing worries that re-imposed lockdown could slow the economy even further. Monetary and fiscal stimulus measures have positively affected the US labour market and consumer confidence. The unemployment rate improved to 11.1% in June from 13.3% in May. However, it remains worse than the pre-pandemic level of 3.6% in January. According to a survey by the Conference Board, US consumer confidence recovered to 98.1 in June, after falling to 85.7 in April and 85.9 in May, but it is still well below March’s 118.8 before the pandemic hit the US.
However, the most recent investment data from May suggested that US industrial sector activity is slowing down, with production falling by 15.4% year-on-year, extending a decline of -17.7% year-on-year in April. Similarly, exports decreased by 36.3% year-on-year in May, quickening from a year-on-year drop of 29% in April. However, a PMI survey by the Institute for Supply Management (ISM) showed some signs of improvement in the manufacturing sector. The manufacturing PMI rose to 52.6 in June from 43.1 in May, while the services sector PMI rebounded to 57.1 from 45.4 over the same period.
