Somewhat Better Manufacturing Data in China and Europe for October, But Weaknesses Persist

The HSBC Flash China PMI rose to its highest level in three months, up from 50.2 in September to 50.4 in October. It was the fifth consecutive monthly expansion in manufacturing activity in China, an improvement from the contracting activity levels experienced in the first five months of 2014. Yet, despite the better headline figure, many of the underlying data points reflect some easing in growth rates for the month, including new orders (down from 51.5 to 51.4), exports (down from 54.5 to 52.8) and output (down from 51.3 to 50.7). Hiring continued to decline but at a slower rate (up from 47.5 to 48.6).

As such, Chinese manufacturers are expanding but not by as much as we might prefer. This finding is consistent with the deceleration in other Chinese data, including real GDP, which slowed from 7.5 percent year-over-year growth in the second quarter to 7.3 percent in the third quarter. Fixed real investment (down from 16.5 percent year-over-year in August to 16.1 percent in September) and retail sales (down from 11.9 percent year-over-year to 11.6 percent) also declined. On the positive side, industrial production picked up, increasing from the year-over-year rate of 6.9 percent in August to 8.0 percent in September; yet, that remained lower than July’s 9.0 percent pace.

Meanwhile, the Markit Flash Eurozone Manufacturing PMI increased from 50.3 to 50.7. That is good news, as the September figure had been the lowest level since July 2013, when Europe first emerged from its recession. October’s reading was higher largely due to a pickup in output (up from 51.0 to 51.9) and employment (up from 50.1 to 50.6). Still, new orders (unchanged at 49.3) contracted for the second straight month, with exports (down from 51.6 to 50.5) easing. The Eurozone continues to face challenges in manufacturing, especially in terms of falling sales. The results also vary by country, with Germany (up from 49.9 to 51.8) improving somewhat, while French manufacturers  (down 48.4 to 47.6) continue to report weakness.

Closer to home, the Markit Flash U.S. Manufacturing PMI dropped slightly, down from 57.5 to 56.2. The pace of activity was down across-the-board, including new orders (down from 59.8 to 57.1), output (down from 59.6 to 58.0), hiring (down from 56.4 to 56.2) and exports (down from 54.1 to 51.9). While the index for new orders was at its lowest level since January’s 53.9 reading, it is hard to get too worked up over October’s decline for these indicators. After all, demand, production and employment continue to grow at decent rates, and manufacturers are reporting higher activity levels than earlier in the year.

Still, we would like to see better results to begin the fourth quarter, particularly for exports. Given the softness in worldwide markets, however, this weakness should not be a surprise.

Chad Moutray is the chief economist, National Association of Manufacturers. 

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

GlobalFoundries Taking Steps to Drive Future Innovation

GlobalFoundries is bringing computer chip design in-house, opening the doors for new business and growth. Acquiring the business from IBM’s Vermont and New York locations is a boon for GlobalFoundries innovation – gaining customers and, importantly, the institutional expertise of 5,000 researchers and engineers. This partnership between IBM and GlobalFoundries will not only preserve these manufacturing jobs, but will leverage IBM’s commitment to R&D and GlobalFoundries’ ability to develop and enable technologies

Driving the next generation of innovation and game-changing products is a critical to maintaining manufacturers’ in the U.S. mantle of leadership. Manufacturing today is sleek, advanced, and technological. The ability to stay ahead of the competition and innovating at every turn will define the future of manufacturing and it’s great to see GlobalFoundries, like many others, is taking pro-active steps to ensure future growth. Manufacturing is making a comeback and we can’t wait to see what’s around the corner.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

NAM Leadership Road Show Heads to the Steel City

With Election Day now less than three weeks away, the NAM continued its Leadership Engagement Series today with a stop in Pittsburgh, Pennsylvania. Numerous manufacturing leaders including Gerald MacCleary, President of Bayer MaterialScience; Marc Skalla, President of SASCO Chemical Group, Inc.; Richard Harshman, Chairman, President and CEO of Allegheny Technologies Incorporated; and Nicholas Pinchuk, Chairman and CEO of Snap-on Inc. met with NAM President and CEO Jay Timmons to discuss the future of the manufacturing sector and both the opportunities and the obstacles that lie on the horizon.

What better place, after all, to talk about the vital role of manufacturers and the policies that impact them than the Steel City?

Pittsburgh has long been at the forefront of the manufacturing sector. Today, while heavy manufacturing and industry remains a mainstay of Pittsburgh’s economy, the city is also helping to drive the development of advanced manufacturing techniques and technologies that will help the United States to remain a world leader in manufacturing. In Pittsburgh’s back yard, the Marcellus Shale is providing the ample, affordable energy needed to sustain the current manufacturing renaissance, and continue to lure producers back to the United States.

The conditions in Pittsburgh – strong R&D, affordable energy, and a legacy built on manufacturing – are emblematic of what’s helped the American manufacturing sector to grow in recent years. We can sustain these conditions nationwide against the right policy backdrop. Unfortunately, Washington seems bent on policies that would work contrary to these goals. The Environmental Protection Agency continues to advance air regulations that would cripple our energy sector and devastate our economy. Congress remains idle on reauthorization of the Export-Import Bank. Our tax code remains a burdensome relic.

The NAM’s Leadership Roadshow is focused on helping manufacturers to present a unified voice in the face of such threats. With just a few short days until the votes are tallied, doing so has rarely been more important. To get involved in the upcoming election, visit the NAM’s Election Center.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

Manufacturers Gather in Seattle for NAM’s Leadership Engagement Series

Leading manufacturers gathered in Seattle today to spark a conversation about America’s manufacturing comeback and the important role manufacturers must play to ensure America’s competitiveness in the 21st Century economy.  The economic situation in Washington is better than the rest of the nation. The unemployment rate is lower than the national average, median incomes are higher and we can credit a lot of this to the manufacturing industry here.

Manufacturing employs nearly 10 percent of Washington’s workforce, almost 300,000 jobs. Manufacturers’ ability to compete is significantly affected by decisions made in Washington, D.C. and it’s absolutely critical that they engage in important policy discussions. That’s why NAM is hosting a Leadership Engagement Series, traveling to major cities across the nation to discuss top manufacturing concerns and urge manufacturers to engage in the political process.

From overburdening energy regulations to increasing healthcare premiums and taxes and the need to open the doors to more free trade agreements with Trade Promotion Authority, Congress is preventing the manufacturing industry from reaching its full potential. But as a top employer, manufacturers have a powerful voice in the November elections and it’s time we take action and push for more substantive federal policies that benefit, not punish, job creators.

Follow NAM on Twitter (@ShopFloorNAM) for more information on NAM’s Leadership Engagement Series and visit the NAM’s Election Center for more information on how you can get involved.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

Leadership Engagement Series Unites Manufacturers in Wisconsin

Manufacturers large and small gathered in Milwaukee today to discuss top manufacturing priorities and how to advance federal policies that boost U.S. manufacturers’ competitiveness. The event is part of NAM’s Leadership Engagement Series, a national roadshow stopping in multiple cities to encourage manufacturers to get engaged in the political process. Today’s panelists included manufacturing CEOs from Rockwell Automation, Neenah Enterprises, and Snap-on Incorporated.

Manufacturing leaders discussed the importance of manufacturing in Wisconsin, as it is the largest sector in the state’s economy and the number one job creator—accounting for 455,579 jobs last year. Unfortunately, the thriving industry is under attack by the federal government and its advancement of multiple policies that threaten the manufacturing comeback.  From rising healthcare costs and taxes to environmental overregulation, Congress isn’t doing the manufacturing industry any favors.

Manufacturers must make their voice heard in Washington. We need federal policies that enhance manufacturers’ ability to compete in the marketplace and give us the opportunity to grow and create more jobs.

Follow NAM on Twitter (@ShopFloorNAM) for more information on NAM’s Leadership Engagement Series and visit the NAM’s Election Center for more information on how you can get involved and make a difference.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

Corning Hosts Secretary Moniz to Celebrate Manufacturing Day

Manufacturing Day was a massive success and a testament to manufacturers’ commitment to their communities and their craft. President Obama recognized it with an official proclamation, declaring October 3rd as National Manufacturing Day and his cabinet helped recognize that at events around the country.

Corning put on an outstanding showcase of high-tech manufacturing, hosting Energy Secretary Dr. Ernest Moniz at their Erwin, New York Diesel plant to highlight its $250 million expansion and impressive growth of emission-control products, due in part to a pro-investment tax credit through the Department of Energy.

Dr. Moniz toured the plant, getting an up close look at the impressive array of clean-air products, an area where Corning has led in developing these technologies since the early 1970’s. Innovation and investment are drivers of a strong economy and Corning stands as a prime example where impressive growth and job creation are the end result.

“It’s especially fitting that we’re holding this event on National Manufacturing Day, because both the Department of Energy and the United Steelworkers were instrumental in enabling the $250 million expansion of [the Diesel plant],” said Wendell Weeks, Corning’s chairman and CEO. “It’s a terrific example of how government, business, and unions can work together to enhance our quality of life and strengthen our economy.”

The NAM tips its cap to Corning for shining a light on its proud tradition of innovation and growth.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

Monday Economic Report – October 6, 2014

Here are the files for this week’s Monday Economic Report: 

Several recent indicators have shown marked improvements in the U.S. economy and for manufacturing activity, particularly when compared to earlier in the year. These range from the NAM/IndustryWeek Survey of Manufacturers to increased levels of demand and output. Last week, for instance, the Institute for Supply Management (ISM) reported that the pace of production (up from 64.5 to 64.6) was marginally higher in September, with the index exceeding 60—indicating strong growth—for four consecutive months. Likewise, the new orders index has measured 60 or higher for three straight months, even though it eased somewhat in September (down from 66.7 to 60.0). That was an encouraging sign, and it was consistent with a relatively upbeat outlook as noted by the National Association for Business Economics (NABE).

Yet, the headline ISM Purchasing Managers’ Index (PMI) for manufacturing unexpectedly dropped from 59.0 to 56.6. The prior month’s reading had been a three-year high, making the deceleration in sentiment a bit of a disappointment. The drop stemmed from slower paces of growth for domestic sales, exports (down from 55.0 to 53.5) and employment (down from 58.1 to 54.6). Along those lines, manufacturers added just 4,000 net new workers in September, with August’s employment number revised lower to reflect a decline of 4,000 employees for the sector. As such, we have had two straight months of disappointing manufacturing jobs numbers, which stand in stark contrast to the stronger hiring rates seen prior to August. We can hope for healthier job gains in the coming months, which would be more consistent with the mostly optimistic tone seen in other measures.

Indeed, the Dallas Federal Reserve Bank’s manufacturing survey noted robust pickups in production, capacity utilization and shipments in September, and respondents continue to expect stronger activity levels over the next six months. In addition, factory shipments have risen 2.1 percent year-to-date through August, or 3.1 percent over the past 12 months. The corresponding data on new factory orders reflected a sharp decline in August, but that was the result of very strong nondefense aircraft sales in July. While new manufactured goods sales remained soft when excluding transportation orders, the underlying data also reflect gains made since the winter months. Moreover, manufacturers have been confident enough in their outlook to increase construction spending, which rose 1.5 percent in August, increasing for the fifth straight month. Year-over-year growth in manufacturing construction spending was an impressive 14.9 percent.

At the consumer level, personal spending rebounded in August after holding steading in July. Since winter-related declines in January, personal spending has risen 2.7 percent, with 4.1 percent growth year-over-year. Strength in durable goods purchases boosted the August consumption figure. Still, Americans remain anxious, particularly about labor and income growth. The Conference Board’s Consumer Confidence Index declined from 93.4 in August to 86.0 in September, a notable and sizable decrease especially after the index had been at its highest point since October 2007 in August. It is possible that geopolitical events have put the public on edge, dampening enthusiasm. (The same could probably be said of the ISM report discussed above.) We have similar concerns in comparable data from the University of Michigan and Thomson Reuters, and the two releases support the notion that the consumer remains cautious despite recent improvements in sentiment.

Meanwhile, the U.S. trade deficit narrowed from $40.32 billion in July to $40.11 billion in August, its lowest level since January. In general, we have seen the trade deficit decline after peaking at $45.98 billion in April. Since then, goods exports have increased by $3.79 billion, and goods imports have declined by $1.99 billion, helping to explain the bulk of the shift over that four-month period. Much of that improvement can be explained by increased energy exports and reduced energy imports.

After a busy economic data release calendar last week, this week will be much lighter. The minutes of the September 16–17 Federal Open Market Committee meeting will be released on Wednesday, with market watchers looking for clues for when the Federal Reserve will start raising short-term rates. Other highlights include the latest data on consumer credit, job openings and wholesale trade.

Chad Moutray is the chief economist, National Association of Manufacturers. 

manufacturing construction - oct2014

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

SBA Speaks Out!

We congratulate the Small Business Administration’s Office of Advocacy for being “the voice of small business in government” today.  The SBA spoke loud and clear on how the proposed rule on “waters of the United States” will impact small business. The Office of Advocacy released a nine page letter this week calling for the EPA/Corps to “to withdraw the rule and conduct a SBAR (Small Business Advocacy Review) panel prior to promulgating any further rule on this issue.”

The SBAR panel that is required under the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) and is designed to provide small business with direct input from affected businesses prior to rule being published.

The letter takes the agencies to task for improperly certifying the rule on three points: 1) the agencies used the wrong baseline for their Regulatory Flexibility Act certification; 2) the rule imposes direct costs on small businesses; 3) the rule will have a significant economic impact on small business.

The NAM membership is made up of predominantly small and medium size businesses. This rule will significantly impact not only manufacturers but farmers, developers, construction companies and a significant portion of the supply chain.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

Pfizer Puts Biotechnology on Display for North Carolina Students

Pfizer Global Supply in Sanford, North Carolina is helping celebrate Manufacturing Day by opening their doors for an educational event for local students, community leaders and Pfizer industry partners.  It’s a wonderful opportunity to spotlight the lifesaving and life changing vaccines and biotechnologies.

The student group will tour the site first and then join a panel discussion focusing on careers in vaccine manufacturing.  The second track will begin with a vaccine manufacturing panel discussion featuring NC State Representative Mike Stone, Pfizer’s Vice President of Biotech Operations, Matt Walker, and Sanford colleagues Charles Mitchell and Brian Franklin.  Following the panel discussion, this group will tour the facility.  The tours will focus on how vaccines are made, quality and engineering.

Today’s experiences are critical to encouraging students to pursue a career in biotechnology manufacturing and take part in the next generation of innovation.

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

Manufacturing Job Growth Disappointed in September for the Second Straight Month

The Bureau of Labor Statistics said that manufacturers added 4,000 net new workers in September. As such, manufacturing job growth has disappointed for the second straight month, with August’s figure revised from being unchanged to being down by 4,000 employees. Prior to August, the sector had averaged 14,429 additional hires per month on net, and there was (and still is) an anticipation for that pace to continue moving forward.

Instead, job growth in the manufacturing sector was soft in August. Durable goods firms added 7,000 new employees, with nondurable goods businesses losing 3,000 workers. There was increased employment observed in the motor vehicles and parts (up 3,300), fabricated metal products (up 2,000), furniture and related products (up 1,400) and primary metals (up 1,100). Yet, these were partially offset by reduced hiring for electrical equipment and appliances (down 1,100), chemicals (down 900), computers and electronic products (down 400) and petroleum and coal products (down 400), among others.

Average weekly earnings were slightly lower, down from $1,018.41 in July to $1,015.14 in August, essentially returning to July’s numbers. This still reflects improved movement long term. In addition, the average number of hours manufacturers worked per week remained unchanged at 40.9, with the number of overtime hours edging up from 3.4 to 3.5.

Meanwhile, the larger economy generated 248,000 new nonfarm payroll workers in September. This means that 7 of the past 8 months have had net job gains exceeding 200,000 per month, averaging 226,667 per month over the first three quarters of 2014. This reflects overall job growth that has improved from last year’s 194,000 average.

In addition, the unemployment rate fell from 6.1 percent to 5.9 percent, its lowest level since July 2008. However, one persistent challenge has been the labor force participation rate, which dropped from 62.8 percent to 62.7 percent. That rate was the lowest since February 1978.

Overall, the data are mostly positive, particularly for the U.S. economy as a whole. It is encouraging to see upward movement in job creation, with the unemployment rate falling to a six-year low. Still, there continues to be sufficient slack in the labor market, and manufacturing employment growth was well below expectations in both August and September. Manufacturers remain mostly optimistic about demand and production, and recent data on hiring plans would seem to indicate stronger job growth than what these figures show. We hope to begin to see healthier employment gains in the coming months. If not, this report tends to support a degree of cautiousness in the economic outlook that might dampen an otherwise positive expectation about the next few months.

Chad Moutray is the chief economist, National Association of Manufacturers. 

VN:F [1.9.22_1171]
Rating: 0.0/5 (0 votes cast)

A Manufacturing Blog

  • Categories

  • Connect With Manufacturers

  • Blogroll