NAM: Global Manufacturing Economic Update
Manufacturers globally continue to face challenges with operational and demand disruptions due to the COVID-19 outbreak. Economies around the world are suffering from an abrupt and severe recession. Activity in the sector has fallen at unprecedented paces in most major markets, with purchasing managers’ indices often at record lows or at the worst readings since the Great Recession. Some highlights:
The J.P. Morgan Global Manufacturing PMI fell in April at the fastest pace since March 2009, and each of the top 10 markets for U.S.-manufactured goods experienced contracting manufacturing activity in April.
Country and regional data on economic growth illustrate sizable — and often historic — declines in GDP, industrial production, employment and retail sales.
Industrial production, fixed asset investment and retail sales data in China improved in March but remained negative year-over-year. There will be updates on these measures later today (early morning Chinese time on May 15), with analysts looking for signs of further progress.
The U.S. trade deficit widened in March, but there were sharp reductions in trade volumes due to COVID-19 and deteriorating global growth. In March, the decline in goods exports outpaced the fall in goods imports, with both measures at their lowest levels since mid-2017.
According to seasonally adjusted data from TradeStats Express, U.S.-manufactured goods exports totaled $325.47 billion in the first quarter of 2020, down 4.57% from $341.03 billion in the first three months of 2019.
The International Monetary Fund predicts that world output will decline by 3% in 2020, with advanced and emerging/developing economies contracting by 6.1% and 1%, respectively. It forecasts a modest rebound in 2021.
Depending on various scenarios (ranging from optimistic to pessimistic), global trade volumes could fall 13% to 32% in 2020, according to the World Trade Organization.
Manufacturers continue to advance efforts with the administration and Congress to ensure trade certainty and address challenges overseas, particularly amid the COVID-19 pandemic:
Releasing the manufacturers’ action plan for the U.S. response, recovery and renewal amid the COVID-19 pandemic
Continuing to lead manufacturers’ efforts to align critical infrastructure guidance globally
Monitoring U.S.–China negotiations and urging support for targeted Section 301 tariff relief
Monitoring implementation of the United States–Mexico–Canada Agreement, with entry into force expected on July 1
Advocating for the negotiation of a comprehensive U.S.–U.K. trade agreement
Stressing the importance of innovation and intellectual property to manufacturing competitiveness, with the April 29 release of two high-level reports by the Office of the U.S. Trade Representative
Securing a strong Miscellaneous Tariff Bill in 2020 to eliminate tariffs on products not produced or available in the United States