Weak, but Improving, Global Manufacturing Output.
The latest purchasing managers' data from Markit suggest sluggish production levels worldwide. Markit and JPMorgan report that their
global composite PMI
was 48.9 in September, a modest gain from August's 48.1 reading. As with most PMI data, numbers under 50 indicate a contraction.
Production and new orders have declined for four straight months, with new export sales lower since April. These contractions have been most evident in Europe and Asia. Even the Institute for Supply Management's
latest manufacturing data
""which reflected surprising gains in domestic new orders""observed continuing reductions in trade activity, something that will hamper growth for manufacturers in the United States moving forward.
Weaker Business Activity in Our Top Trading Markets.
PMI readings below 50 in six of the 10 largest export markets for U.S.-manufactured goods. The four nations with expanding growth were Canada, Hong Kong, Mexico and (starting with the latest
for September) the Netherlands. The PMI for the
was 46.1, an improvement from the 45.1 observed in August. Still, this was the seventh consecutive month of declining production in Europe, with new orders, output and employment growth remaining in negative territory. Manufacturing activity continues to be lackluster in many key European markets, with even
""Europe's largest economy""reporting a PMI of 47.4 in September, improving modestly from 44.7 in August.
Other nations with contracting activity in September included China, Japan, South Korea and the United Kingdom. In
, the PMI reading was 47.9 in September, up slightly from 47.6 in August. This was the 11th consecutive month of contraction in Chinese manufacturing, led by lower sales volumes. Exports continue to fall sharply. Reduced new orders primarily contributed to contractions in the other three nations, as well.
North American Industrial Production Exceeds Other Regions.
Industrial production in Canada and Mexico is doing better than other regions. Year-over-year growth in production in the two countries was up 3.4 percent and 4.8 percent, respectively, in the most recent data. U.S. manufacturing production was also higher, up 4.0 percent between August 2011 and August 2012. Meanwhile, over the course of the past year, many of our top trading partners experienced a decline in production activity. Recent data for Brazil, Germany, Hong Kong, the Netherlands and the United Kingdom have reflected some improvements.
U.S. Trade Deficit Unchanged, but Exports and Imports Fall.
U.S. trade deficit
was mostly unchanged at $42.0 billion in July, both goods exports and imports fell for the month, essentially offsetting one another. Manufactured goods exports declined significantly from $89.4 billion to $80.9 billion (not seasonally adjusted). These declines were seen across-the-board among all of our major trading partners, except for China and Mexico, which were unchanged. Exports to Europe, the Pacific Rim and South America were all lower. Clearly, slowing global growth and economic uncertainties about the future are taking a toll.
The Petroleum Trade Balance Has Narrowed Significantly This Year.
It is down from a $30.0 billion deficit in January to $20.9 billion in July. This decrease has stemmed almost entirely from a drop in imports. Lower costs could explain part of this narrowing, but slowing economic growth is also most likely the main factor. Petroleum exports and imports both declined in July, down from $10.4 billion to $9.8 billion and from $32.9 billion to $30.8 billion, respectively.
Manufactured Goods Exports Remain a Net Positive in 2012.
Even with this month's decline, year-to-date manufactured goods exports were $594.3 billion, still $40.4 billion more than at this point in 2011. Looking at major sectors, the largest year-to-date gains in goods exports are in capital goods (up $23.9 billion), motor vehicles and parts (up $10.1 billion), industrial supplies and materials (up $10.1 billion) and consumer goods (up $4.6 billion). Civilian aircraft recorded the greatest year-to-date gain of any one category, up $7.0 billion.