NAM: Global Manufacturing Economic Update
Increased orders and production helped buoy the Caixin China General Manufacturing PMI to the strongest reading since November 2010, as China’s economy continued to recover from the negative impacts of COVID-19 earlier in the year. Employment growth was the best since 2011, and respondents were upbeat in their outlook, despite rising costs. Industrial production, retail sales and fixed-asset investment have also improved notably this year. However, retail spending and business investment remain markedly lower than before the pandemic.
The J.P. Morgan Global Manufacturing PMI expanded in November at the fastest pace since February 2018, buoyed by strength in demand and production and expanding for the fifth straight month. Employment expanded marginally in November, rising for the first time in 12 months. In addition, the index for future output reached a level not seen since February 2015, pointing to optimism for higher production over the next six months. Meanwhile, input prices rose at the fastest pace in two years.
In November, seven of the top 10 markets for U.S.-manufactured goods had expanding manufacturing sectors, down from eight in October, with France slipping back into contraction. With that said, the data also point to renewed weaknesses in the services sector in some areas, particularly in Europe, where COVID-19 cases are once again on the rise.
The IHS Markit Eurozone Manufacturing PMI pulled back from October, which had posted the highest reading since July 2018. However, activity in November still represented an expansion for five consecutive months. Despite some progress since the spring, Eurozone industrial production was off by 0.4% in September and down 6.8% year-over-year (see accompanying chart). October data will be released on Dec. 14.
Since April 24, the U.S. dollar has fallen 10.0% against a broad-based index of currencies for goods and services to the lowest level since June 7, 2018, according to the Federal Reserve. The index reflects currency rates per U.S. dollar, suggesting the dollar can purchase less today than it could just a few months ago. The weaker U.S. dollar could help boost exports, but it would also increase the cost of imported raw materials and other inputs.
The U.S. trade deficit rose from $62.08 billion in September to $63.12 billion in October, with growth in goods imports outpacing gains in goods exports. Volumes for goods exports and service-sector trade have both fallen significantly year to date.
U.S.-manufactured goods exports have fallen roughly 16% year to date in 2020 relative to the same 10-month period in 2019, using non-seasonally adjusted data.
Manufacturers continue to advance efforts with the administration and Congress to open markets, ensure trade certainty and address challenges overseas, including the following:
Continuing to monitor the U.S.–China security, trade and economic relationship
Urging legislative action against counterfeit imports sold online
Leading industry advocacy in support of congressional passage of a comprehensive Miscellaneous Tariff Bill