NAM: Global Manufacturing Economic Update
The J.P. Morgan Global Manufacturing PMI rose from 55.0 in March to 55.8 in April, the fastest pace in 11 years, buoyed by growth in new orders, output and hiring, each of which was the strongest in at least a decade.
Overall, manufacturers remain very upbeat in their outlook for production over the next six months. However, survey respondents also cited significant supply chain disruptions, with input costs soaring at the fastest pace since March 2011. The country-by-country data also reflected these larger trends, with robust growth in orders and output, but also in raw material prices.
Eight of the top nine markets for U.S.-manufactured goods had expanding manufacturing sectors in April. Although Mexico remained challenged, the decline in activity was the slowest since the COVID-19 pandemic began. The Netherlands set new records for production growth, and in the process, notched the highest PMI among the top nine exports markets in April.
Manufacturers reported robust expansions in Canada, Germany and South Korea , even as activity pulled back in April from either record or multiyear highs. At the same time, the IHS Markit/CIPS U.K. Manufacturing PMI rose to the best reading since July 1994. New orders, output and employment lifted Japanese manufacturing growth to its strongest level in three years.
Although the data largely reflect a major rebound in activity since last spring, it is important to also issue a word of caution. The year-over-year data compare activity today versus one year ago, when COVID-19 forced growth to plummet. As a result, the year-over-year growth numbers will be larger, mostly on so-called “base effects.”
For a case in point, Chinese real GDP soared 18.3% year-over-year in the first quarter, the fastest pace since 1992, with industrial production rising 14.1% year-over-year. Chinese fixed-asset investment (up 25.6% year-over-year) and retail sales (up 34.2% year-over-year) also showed very robust gains over the past year. New data for April will be released on May 17.
The U.S. trade deficit rose to $74.45 billion in March, an all-time high. Trade volumes were higher overall, but growth in imports (which also hit a new record) outpaced the rise in exports. The service-sector trade surplus hit the lowest level since August 2012.
U.S.-manufactured goods exports in the first quarter of 2021 were 3.52% lower than the pace seen through the first three months of 2020, using non-seasonally adjusted data.
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:
Criticizing U.S. support for waving intellectual property for COVID-19 vaccines
Continuing to urge the Biden administration to rapidly develop and implement a strong, comprehensive China strategy
Stressing the importance of tackling pressing global challenges and strengthening U.S. global leadership at the United Nations and other multilateral organizations
Urging the nomination of a full slate of qualified candidates to serve on the Export-Import Bank Board of Directors
Continuing to lead industry advocacy in support of expeditious congressional passage of a comprehensive Miscellaneous Tariff Bill