Just two of the top 10 markets for U.S.-manufactured goods experienced growth in activity in March: China and the Netherlands. More importantly, aside from the rebound seen in China, each of the other nine economies had weaker PMI data in March than in February, highlighting the abrupt halt in activity seen globally as nations struggle to contain the COVID-19 pandemic.
The J.P. Morgan Global Composite PMI, which includes both manufacturing and services, fell sharply from 46.1 to 39.4, its lowest level since February 2009. More importantly, the services sector component (down from 47.1 to 37.0) dropped to an all-time low, with fewer people going to restaurants or retailers and travel beyond the home severely restricted worldwide.
The improvements seen in China in March reflect the attempts of businesses coming back online to some extent. New data on industrial production will likely also show this rebound when released on April 17. In February, Chinese industrial production fell 13.5% year-over-year, its steepest drop in output since 1990.
Elsewhere, the data continue to reflect the struggle to maintain operations worldwide, with new orders and production dropping sharply. Many firms are also dealing with supply chain and employment disruptions. Here are some examples:
Despite rising somewhat in March, the J.P. Morgan Global Manufacturing PMI noted that the contraction in demand was the worst since the spring of 2009.
Eurozone manufacturing activity declined at the fastest pace since July 2012, with Germany contracting for the 15th consecutive month and other markets also struggling. Business and consumer confidence in Europe fell from 103.4 in February to 94.5 in March, the biggest monthly drop in the survey’s 35-year history.
Our largest trading partners, Canada and Mexico, each contracted sharply in March. Activity in Canada fell to the lowest level since the survey began in October 2010. Activity in Mexico, down from 50.0 to 47.1, contracted for the fourth time in the past five months.
The au Jibun Bank Japan Manufacturing PMI fell to its worst reading since the April 2011 tsunami.
The April IHS Markit survey data will likely show further deteriorations in manufacturing sentiment globally.
The U.S. dollar has soared 7.0% against a broad-based index of currencies for goods and services since March 3, according to the Federal Reserve. As such, the U.S. dollar has been very strong relative to other currencies, especially as investors have flocked to the safety of dollar-denominated assets in the current COVID-19 financial crisis.
The U.S. trade deficit fell to the lowest level since September 2016, decreasing from $45.48 billion in January to $39.93 billion in February. The decline over the past two months in the trade deficit has stemmed largely from a sharp decrease in goods imports, which have fallen from $207.44 billion in December, to $203.37 billion in January, to $198.42 billion in February, a level not seen since October 2016.
In non-seasonally adjusted data, U.S.-manufactured goods exports declined by roughly 1 percent in the first two months of 2020 relative to January and February of 2019.
Manufacturers continue to advance efforts with the administration and Congress to ensure trade certainty and address challenges overseas, particularly amid the COVID-19 pandemic:
Monitoring foreign export restrictions and bans on personal protective equipment, health products and other products during the COVID-19 response
Working with U.S. government agencies to create streamlined communication channels to aid manufacturers facing trade and supply chain bottlenecks
Monitoring essential critical infrastructure guidance globally during the COVID-19 crisis
Urging a quick return to the negotiating table to begin negotiations on a U.S.–China “phase two” trade deal
Working with policymakers in the United States, Mexico and Canada to ensure full implementation of the United States–Mexico–Canada Agreement
Securing a strong Miscellaneous Tariff Bill in 2020 to eliminate tariffs on products not produced or available in the United States
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