NAM: Global Manufacturing Economic Update
The J.P. Morgan Global Manufacturing PMI expanded in July for the first time since January, buoyed by recoveries in demand and production. Output grew at the fastest pace since December 2018 as the sector continues to bounce back from COVID-19 and the severe worldwide recession. Manufacturers expressed cautious optimism about future production.
Sentiment among the top 10 markets for U.S.-manufactured goods improved in every economy in July, with six markets expanding, up from just four in June and one in May.
Expanding economies: Brazil (a record high manufacturing PMI), Canada (best since January 2019), China (best since January 2011), France (best since September 2018), Germany (first expansion since December 2018) and the United Kingdom (best since March 2019).
Still-challenged markets: Japan, Mexico, the Netherlands and South Korea.
Despite recent progress, manufacturers still need to dig out of a deep hole globally, with industrial production well below the prepandemic pace. Industrial production data in several markets reflect this.
In seasonally adjusted data, U.S.-manufactured goods exports totaled $566.92 billion through the first six months of 2020, dropping 17.35% from $685.93 billion for the same time frame in 2019, according to TradeStats Express.
Meanwhile, the U.S. trade deficit declined from $54.80 billion in May, the highest point since December 2018, to $50.70 billion in June.
Since April 24, the U.S. dollar has fallen 5.2% against a broad-based index of currencies for goods and services, according to the Federal Reserve. Yet, manufacturers continue to cite a strong dollar as a challenge, both to their earnings and for increasing international demand.
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:
Monitoring rising tensions in the U.S.–China security, trade and economic relationship
Elevating manufacturers’ fight against fake and counterfeit goods
Leading industry advocacy in support of a congressional passage of a comprehensive Miscellaneous Tariff Bill
Characterizing the Trump administration’s decision to reimpose aluminum tariffs from Canada as a step backward for the United States–Mexico–Canada Agreement
Submitting comments to the Trump administration on a series of trade enforcement investigations, including the U.S.–EU large civil aircraft dispute, digital services taxes and imports of vanadium