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City Performance Score highlights major cities in Americas
underperformed at height of pandemic
Metropolises in Brazil, Canada and Mexico saw scores stay
negative into November
US cities recorded stark underperformance, but were quick to
return to outperformance territory
Major cities across the Americas suffered in particular during
the coronavirus disease 2019 (COVID-19) pandemic earlier in the
year, but those in the US saw a sharp rebound as lockdown measures
were relaxed at the end of the summer.
Following our research into the relative performance of European
Cities, which found a noticeable underperformance of cities due to
the COVID-19 pandemic and related 'lockdown' measures, we now turn
to look at a selection of metropolises across the Americas and
assess the performance of cities and the rest of their respective
countries throughout 2020 so far.
In this analysis we again turn to PMI™ Output Index data, across
private sector manufacturers and service providers (where both are
covered) in a range of cities. To select these, we looked at the
largest population centres and city economies in countries across
the North and South American continents, for which we produce PMI
data, and were guided by the sample sizes we have available on our
panels to ensure reliable results.
For the purposes of this paper, we cover an amalgamation of ten
US cities (New York, Los Angeles, Houston, Chicago, Phoenix,
Philadelphia, San Antonio, San Diego, Dallas, San Jose), six
Canadian cities (Toronto, Montreal, Vancouver, Calgary, Edmonton
and Ottowa), and three Colombian cities (Bogota, Medellin and
Cali), along with a combination of companies in Sao Paulo and Rio
De Janeiro, the two largest metropolises in Brazil, and Mexico's
capital, Mexico City.
The inclusion of multiple cities is due to a relatively even
spread of companies in each of the big cities used across our
panels, and has the added effect of ensuring we capture as much of
the trend between large cities and the rest of the country as
possible.
It is also important to note that our surveys in Canada,
Colombia and Mexico cover private sector manufacturers and do not
include service providers. As such, the output index represents
just the goods producing sector in each country.
Cities see worsening performance from onset of
pandemic
Data highlights that the cities in each of our five countries
underperformed in terms of output during the middle of 2020 as the
COVID-19 pandemic hit, with their respective City Performance
Scores all in negative territory. This trend mirrors that seen in
Europe, where our performance data pointed to the pandemic having a
stronger impact on large cities. This reflects a number of factors,
including people avoiding crowds due to the higher risk of
infection, offices lying empty, and measures implemented to tackle
the spread of the virus resulting in swathes of the economy -
particularly customer facing sectors - closing temporarily.
Each of the five monitored city groups registered an
underperformance in May, June and July, with only cities in Brazil
and Colombia outperforming in the immediate aftermath of the
pandemic in April. Moreover, the metropolises in both Brazil and
Canada are still lagging behind other parts of those countries,
while the extent of Mexico City's underperformance remains
severe.
US metropolises take biggest hit, along with Mexican
capital
The starkest underperformances of cities relative to the rest of
the respective countries through 2020 to date were registered in
the US and Mexico.
Our amalgamation of top-10 US cities recorded city performance
scores of -2.2 in May and -2.1 in June.
Correspondingly negative readings were seen in Mexico City
during the third quarter, while the November reading of -1.8 still
signalled a considerable underperformance of Mexico's largest city
compared to the rest of the country.
Elsewhere, Colombia's big-3 cities recorded a slightly less
severe, but still notable underperformance in June with a score of
-1.7, while Brazilian and Canadian metropolises each saw city
performance scores of -1.2 in July.
Strong recovery in Brazil not led by
big two cities
Despite being a frontrunner in global
expansion and leading the worldwide manufacturing recovery
according to PMI data, Brazil's two major cities continued to
underperform compared to the rest of the country in the third and
into the fourth quarter of the year. Moreover, the extent of the
underperformance worsened in August with the city performance score
dropping to a year-to-date low of -1.8. The figure has since ticked
up only to -1.5 in November. While growth has been recorded in Rio
De Janeiro and Sao Paulo, the score indicates that rates of
expansion have lagged behind less built-up areas so far.
Business as usual into fourth quarter for Colombian and
US cities
City performance scores for both Colombia and the US have since
hit positive territory, to signal a relative overperformance. The
combined top-10 US cities posted a score of +1.8 in both September
and October, pointing to a noticeable level of outperformance as
big cities roared back to growth following the initial easing of
lockdown restrictions. That said, November's figure was the lowest
for four months, at +0.4.
The improving trend was mirrored in Colombia, where the big-3
cities have registered an outperformance relative to the rest of
the manufacturing sector in each month since August. Moreover,
across our five countries, only the metropolises in Colombia have
an average score throughout 2020 that is in positive territory
(+0.2), signalling that city performances have been broadly similar
to the country-wide trends.
Positive news of a vaccine has buoyed expectations in many parts
of the word, and although slowing, the global economic recovery
continued into November. But, most cities in both the Americas and
Europe continue to struggle as we enter the final month of the
year. This provides further evidence in support of our initial
hypothesis regarding adverse effects from the pandemic hitting
urban areas harder than the country as a whole, and highlights an
ongoing shift, although likely temporary, away from cities as
economic powerhouses.
Nonetheless, PMI data will continue to provide a vital signal of
both the wider economic recovery and that in major cities across
the world. We plan to add further coverage and continue work on
this topic as we move to 2021.
Lewis Cooper, Economist, IHS Markit
Tel: +44 1491 461019
lewis.cooper@ihsmarkit.com
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
