NAM: Global Manufacturing Economic Update
The Caixin China General Manufacturing PMI contracted in August for the first time since April 2020, and new orders declined for the second straight month. Hiring, output and exports were also negative, with supply chain challenges and rising delta cases dampening activity. Prices remained elevated. Yet, manufacturers were positive in their outlook.
Looking at hard data, Chinese industrial production decelerated in July, increasing by 6.4% year-over-year, down from 8.3% in June and the slowest year-over-year pace since August 2020. Fixed-asset investment and retail sales also slowed in July, albeit at still-decent paces.
The J.P. Morgan Global Manufacturing PMI expanded modestly but at the slowest pace in six months. The underlying data were softer across the board, with production growth at the weakest level since June 2020, echoing the supply chain challenges that have plagued firms globally.
Seven of the top nine markets for U.S.-manufactured goods had expanding manufacturing sectors in August, down from eight over the past six months. In addition to China, Mexico’s economy remained challenged. Eight of the top nine markets had weaker activity in August than in July; only Canada reported stronger activity.
The IHS Markit Canada Manufacturing PMI rose to a four-month high in August, and the index for future output strengthened to its best reading since March. Input costs soared at the fastest pace on record. With some pandemic restrictions lifted, manufacturing sales and retail spending both rebounded in June, but real GDP was off 1.1% at the annual rate in the second quarter.
The IHS Markit Eurozone Manufacturing PMI slipped to a six-month low, with rising COVID-19 cases and lingering supply chain issues dampening growth. Eurozone industrial production fell 0.3% in June, extending the 1.1% decline seen in May, with weaker capital goods and energy spending offsetting stronger growth for durable and nondurable goods activity. At the same time, real GDP on the continent rebounded by 2.2% in the second quarter.
The U.S. trade deficit declined from a record $73.23 billion in June to $70.05 billion in July. Goods exports increased to an all-time high for the month, with goods imports edging down from the prior month’s record pace.
According to the latest non-seasonally adjusted data, U.S.-manufactured goods exports totaled $642.16 billion through the first seven months in 2021, soaring 18.80% from $540.53 billion year to date in 2020.
Manufacturers in the United States are working robustly with the Biden administration and Congress to open markets, enforce trade agreements and address challenges overseas and ensure trade certainty and competitiveness, taking actions that include the following:
Calling on senior Biden administration officials to accelerate efforts to formalize its China strategy
Urging the Biden administration to leverage the United States–Mexico–Canada Agreement to address trade barriers faced by manufacturers in Mexico
Continuing to call for “effective” steps to fight COVID-19, not a waiver of World Trade Organization Trade-Related Aspects of Intellectual Property Rights
Continuing to lead industry advocacy in support of expeditious congressional passage of a comprehensive Miscellaneous Tariff Bill