The J.P. Morgan Global Manufacturing PMI rebounded for the second straight month, rising to its strongest reading since January. Overall, the sector continues to stabilize in most economies, even as activity remains contractionary and challenges persist worldwide due to COVID-19 and the severe worldwide recession. Manufacturers are cautiously optimistic for stronger output over the next six months.
Sentiment among the top 10 markets for U.S.-manufactured goods improved in every economy in June, with four markets expanding, up from just one (China) in May. These major trading partners have continued to steady after plummeting in April to levels that were either the worst since the Great Recession or at record lows.
The IHS Markit Emerging Markets Manufacturing PMI stabilized in June, rising from 42.7 in April, the lowest reading since January 2009, to 45.4 in May to 49.6 in June. Despite contracting for the fifth straight month overall, production expanded ever so slightly, and the outlook was encouraging.
The International Monetary Fund said that it expects global growth to fall 4.9% in 2020, downgrading the outlook from an expected 3% decline projected in April. On the positive side, it expects world output to jump by 5.4% in 2021.
Led by sharp reductions in trade volumes, the U.S. trade deficit rose from $49.76 billion in April to $54.60 billion in May, its highest point since December 2018. Goods exports dropped to a level not seen since August 2009. That level more than offset the decrease in goods imports, which fell to the weakest pace since September 2010.
In non-seasonally adjusted data, U.S.-manufactured goods exports totaled $396.58 billion through the first five months of 2020, dropping 15.74% from $470.69 billion for the same time frame in 2019.
Since April 24, the U.S. dollar has fallen 3.4% against a broad-based index of currencies for goods and services, according to the Federal Reserve. The recent pullback reverses the trend seen earlier in the spring, when investors flocked to the U.S. dollar and dollar-denominated assets due to the COVID-19 pandemic. The current trend coincides with signs of improvements in economic activity.
Manufacturers continue to advance efforts with the administration and Congress to open markets, ensure trade certainty and address challenges overseas. Their measures include the following:
Ensuring that the United States–Mexico–Canada Agreement, which entered into force on July 1, is implemented in a way that will bolster that recovery and renewal and maintain broad support for open, rules-based North American trade
Monitoring progress on the U.S.–China “phase one” deal, as well as U.S.–China trade dynamics amid China’s actions on Hong Kong and U.S. responses to those actions
Monitoring U.S.–U.K. trade agreement negotiations to ensure the expeditious conclusion of a comprehensive trade agreement between the two countries
Advocating for clarity and guidance for new U.S. export controls on military end uses and end users, which took effect in June
