NAM: Global Manufacturing Economic Update
The International Monetary Fund forecasts a very robust 6.0% growth in global GDP in 2021, a nice rebound after world output fell by 3.3% in 2020. The IMF notes that the outlook hinges on vaccinations and the pace of normalization in economic activity in markets around the world. The strength of the recovery will also rest on fiscal and monetary stimulus initiatives being enacted in various countries.
The J.P. Morgan Global Manufacturing PMI rose from 53.9 in February to 55.0 in March, the fastest pace since February 2011. Overall, manufacturers remain very upbeat in their outlook for production over the next six months, but they also cite significant supply chain disruptions. Input prices jumped at the swiftest pace since April 2011.
In March, eight of the top nine markets for U.S.-manufactured goods had expanding manufacturing sectors, the same number as in February. Although Mexico remained challenged, the decline in activity was the slowest in 12 months.
On a country-by-country basis, manufacturing activity set some new records in the latest PMI data from IHS Markit, including in Canada, Germany and the Netherlands. South Korea and the United Kingdom notched their best performances in at least a decade. Meanwhile, in Brazil, rising COVID-19 cases and renewed restrictions took a toll on activity in March.
In China, industrial production jumped 35.1% year-over-year in the January/February release. These results demonstrate not only how bad things were last year at the beginning of the COVID-19 pandemic, but also the very strong rebound since. New data for March will be released on April 16.
After rising in November at the fastest pace since January 2011 (53.9), the IHS Markit Emerging Markets Manufacturing PMI slowed for the fourth straight month. Respondents remain positive about the next six months, even though the index for future input eased from the six-year high in February.
The U.S. trade deficit rose to $71.08 billion in February, an all-time high, with goods exports falling more than goods imports for the month. Goods exports remain down 5.15% year-over-year, despite progress since last spring. In contrast, goods imports have recovered more quickly, up 10.31% over the past 12 months.
According to the latest data, U.S.-manufactured goods exports totaled $161.17 billion in January and February, using non-seasonally adjusted data, dropping 8.59% from $176.31 billion year to date in 2020.
Manufacturers are working robustly with the Biden administration and Congress to open markets, ensure trade certainty and competitiveness and address challenges overseas, taking actions that include the following:
Sending a letter to President Biden urging the implementation of a new China strategy
Calling on U.S. Trade Representative Katherine Tai to leverage the United States–Mexico–Canada Agreement to address Mexico’s trade barriers
Leading a cross-association call for the Biden administration to support American innovation and oppose a harmful waiver to the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights agreement
Leading industry advocacy in support of expeditious congressional passage of a comprehensive Miscellaneous Tariff Bill
Joining a multi-association letter to Ambassador Tai on digital trade priorities