A Publication of the National Association of Manufacturers
October 5, 2012
Welcome to the first edition of the Global Manufacturing Economic Update, which we plan to release the first Friday of every month. This new publication extends our discussion of international economic and policy trends, building on what we already convey for domestic economic activity. The interconnectedness of our markets means that it is hard to have a discussion about the U.S. macroeconomy without mentioning what is happening elsewhere.
Many of you have an ever-increasing presence abroad, making a dialogue about international economics and policy even more relevant. In a worldwide marketplace, the U.S. manufacturing industry would be unwise to ignore the 95 percent of the world living outside our borders. The latest NAM/IndustryWeek Survey of Manufacturers found that more than 42 percent of respondents cited increasing international sales as one of their primary drivers for growth, and those firms anticipating increased exports over the next year were more positive in their overall outlook. Even with so many uncertainties in the world right now, nearly 36 percent of manufacturers expect to see higher exports over the next 12 months.
However, the world economy has been slowing of late. Six of our top 10 trading partners for manufactured goods had a Purchasing Managers’ Index (PMI) of less than 50—the threshold for a contracting manufacturing sector—in September. It should be no surprise then that U.S. manufacturing export growth has eased so far this year. The Eurozone is in a protracted recession, and major countries in Asia and South America have seen a significant slowdown in manufacturing activity in recent months. North America—including our largest trading partners, Canada and Mexico—appears to be the one region in the world where production continues to grow, albeit at a slower pace from earlier in the year.
Next week, the Census Bureau will release the latest international trade data for August. Given the economic global slowdown, I anticipate that we will see more of what we learned from July’s numbers. While the overall trade balance remained unchanged, both exports and imports fell. So far this year, the rate of export growth has slowed significantly from what we saw in either 2010 or 2011, as we came out of the recession. Fortunately, despite many economic headwinds, U.S. manufacturing goods exports remain a net positive year-to-date. This is a positive sign, and one that we would like to build on moving forward.
Questions or comments? Please contact Chad Moutray at email@example.com
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