NAM: Global Manufacturing Economic Update

1. Reflecting the softness of the overall global economy, the top seven markets for U.S.-manufactured goods had declining manufacturing activity in June (Canada, Mexico, China, Japan, the United Kingdom, Germany and South Korea). In total, 11 of the top 20 markets experienced contractions in manufacturing activity in June, up from nine in May and six in April.

2. The J.P. Morgan Global Manufacturing PMI contracted for the second straight month, declining to the lowest reading since October 2012. On the positive side, the index for future output continued to express some optimism that production would rebound over the coming months, even as that measure dropped to the lowest reading since the question began in July 2012.

3. With the United States–Mexico–Canada Agreement’s passage a major focus of manufacturers, it is notable that Canada and Mexico’s economies experienced contracting sectors in June. Manufacturing activity in Canadadeclined for the third straight month, and Mexican data were the weakest since October 2017. There is cautious optimism in the outlook for output in both markets.

4. The IHS Markit Eurozone Manufacturing PMI contracted for the fifth straight month, and Germany, the largest market in Europe, contracted for the sixth consecutive month. At the same time, the United Kingdom declined at the sharpest rate since February 2013 on Brexit worries. In contrast, Frenchmanufacturers reported some continued stabilization for the third consecutive month after briefly contracting in March. The Eurozone unemployment rate fell to 7.5 percent in May, the lowest since July 2008.

5. After expanding for three straight months, the Caixin China General Manufacturing PMI contracted once again in June. Industrial productionslowed to 5.0 percent year-over-year growth in May, the weakest since March 2002. New data on production, fixed asset investment and retail sales for June will be released on July 15 and watched closely.

6. U.S.-manufactured goods exports have declined nearly 2 percent through the first five months of 2019 relative to the same time frame in 2018, using non-seasonally adjusted data. This suggests that international demand for U.S.-manufactured goods has weakened so far this year after experiencing better data in both 2017 and 2018.

7. Manufacturers continue to focus on key trade developments at home and overseas, including:

8. Efforts to move forward the U.S.–Mexico–Canada Agreement as quickly as possible;

9. Ongoing congressional efforts to pass a robust and long-term reauthorization of the U.S. Export-Import Bank;

10. Resumed U.S.–China trade talks and potential new tariffs;

11. Discussions at the G20 on trade and World Trade Organization negotiations; and

12. Administration efforts to combat counterfeiting and piracy.