NAM: Global Manufacturing Economic Update
The World Bank predicts that the world GDP will grow by 4.0% in 2021, bouncing back after declining 4.3% in 2020. With that said, global output will remain 5.0% below pre-pandemic levels by the end of this year. While COVID-19 and its spread remain downside risks to the economic outlook, the prospects of a vaccine and a return to “normalcy” in spending and activity should help the overall recovery.
The J.P. Morgan Global Manufacturing PMI was unchanged at 53.8 in December, continuing to expand at the fastest pace since February 2018, with the headline index expanding for six straight months. Meanwhile, input prices rose at the fastest pace since July 2018.
In December, eight of the top 10 markets for U.S.-manufactured goods had expanding manufacturing sectors, up from seven in November, with Japan being neutral and just one nation (Mexico) in contraction. Some other highlights among these markets:
The data continue to reflect significant progress since the spring. However, the services sector in some areas also saw renewed weaknesses, particularly in Europe, where COVID-19 cases continue to rise.
Manufacturing expanded at strong paces in many markets, including Canada (a new record pace), Germany (best since February 2018), the Netherlands (best reading since September 2018), South Korea (remaining the best since February 2011) and the United Kingdom (best since November 2017).
The U.S. trade deficit rose from $63.11 billion in October to $68.14 billion in November, the highest since August 2006. Goods exports remain well below the pre-pandemic pace, and the service-sector trade surplus was the lowest since August 2012. U.S.-manufactured goods exports have fallen 15.7% year to date in 2020 relative to the same 11-month time period in 2019.
Manufacturers continue to advance efforts with the administration and Congress to open markets, ensure trade certainty and address challenges overseas, including the following:
Advocating successfully for passage of a legislative fix to the merchandise processing fee drafting error in the United States–Mexico–Canada Agreement Implementation Act
Continuing to monitor the U.S.–China security, trade and economic relationship
Encouraging the incoming Biden administration to ensure a fully functional Export-Import Bank
Leading industry advocacy in support of congressional passage of a comprehensive Miscellaneous Tariff Bill
Engaging with manufacturers as the EU database on chemicals in products goes into effect