NAM: Global Manufacturing Economic Update
The J.P. Morgan Global Manufacturing PMI expanded at the fastest pace since May 2018, up from 52.4 in September to 53.0 in October, buoyed by strength in demand and production and rising for the fourth straight month. In October, eight of the top 10 markets for U.S.-manufactured goods had expanding manufacturing sectors, up from seven in September and just one (China) in May.
The International Monetary Fund predicts that worldwide GDP will fall 4.4% in 2020 due to the COVID-19 pandemic and global recession, with output rebounding 5.2% in 2021. While economic activity has trended in the right direction, there are lingering worries in the outlook, including new restrictions on activity in many markets due to the continued spread of the virus.
Along those lines, the service sector has seen renewed weaknesses in some areas, particularly in Europe, where COVID-19 cases are again on the rise. This could pose some risks to the manufacturing sector outlook moving forward if it persists.
The Chinese economy grew 4.9% over the past 12 months in the third quarter, continuing to reflect improvements since the pandemic sharply reduced activity in the first quarter. Industrial production increased 6.9% year-over-year in September, its best annual rate since December.
Eurozone real GDP jumped 12.7% in the third quarter, bouncing back after falling by 3.7% and 11.8% in the first and second quarters, respectively. In August, industrial production rose 0.7%, expanding for the fourth straight month, but output has fallen 7.2% over the past 12 months.
After rising in the three prior months, manufacturing sales in Canada pulled back, down 2.0% in August. Overall, orders in the sector remained 6.6% below the pace seen in February before the COVID-19 pandemic began.
Mexican industrial production rose 3.3% in real terms in August, slowing from the 7.1% gain in July but increasing for the third straight month. It has fallen 8.4% over the past 12 months. [Link is in Spanish.]
Japanese industrial production rose 4.0% in September, increasing for the fourth straight month and led by strength in electronics, machinery and motor vehicles. However, production has fallen 9.0% over the past year.
The IHS Markit Emerging Markets Manufacturing PMI expanded in October at the fastest pace since March 2011. New orders and output accelerated, buoying the headline index, and optimism about future production rose to the best reading since October 2014.
The U.S. trade deficit pulled back from the highest level since August 2006, decreasing from $67.04 billion in August to $63.86 billion in September, with growth in goods exports outpacing the increase in goods imports for the month.
According to the latest update from TradeStats Express, U.S.-manufactured goods exports totaled $857.65 billion through the first three quarters of 2020, using seasonally adjusted data, dropping 16.32% from $1,024.86 billion year to date in 2019 and the slowest pace since 2010.
Manufacturers continue to advance efforts with the administration and Congress to open markets, ensure trade certainty and address challenges overseas, including by:
Monitoring the U.S.–China security, trade and economic relationship;
Submitting comments to the U.S. Department of Commerce on an advanced notice of proposed rulemaking on foundational technologies;
Advocating for U.S.–Mexico–Canada Agreement implementation in a manner that supports U.S. manufacturing and jobs;
Continuing advocacy in support of a one-year delay in the implementation of the European Union’s proposed database on substances of concern in certain products; and
Leading industry advocacy in support of congressional passage of a comprehensive Miscellaneous Tariff Bill.