Global Manufacturing Economic Report – October 10, 2014

Here is the summary for this month’s Global Manufacturing Economic Update: 

The International Monetary Fund (IMF) slightly downgraded its global outlook earlier this week, with Asia, Europe and South America growing slower than expected three months ago. The IMF now expects world output to expand 3.3 percent and 3.8 percent in 2014 and 2015, respectively, down from 3.4 percent and 4.0 percent as estimated in its July report. One notable exception to this downward trend was the United States, with the IMF raising its 2014 forecast from 1.7 percent to 2.2 percent real GDP growth. This reflects recent strength in the U.S. economy, particularly when compared to other nations. To be fair, the IMF had more optimistic expectations for growth coming into this year, projecting 2.8 percent growth in 2014 in its January report. After disappointing growth in the first quarter, however, it lowered its outlook projections, much like everyone else.

One of the bigger challenges remains Europe. The Markit Eurozone Manufacturing Purchasing Managers’ Index (PMI) continued to decelerate in September, with activity just shy of being stagnant. New orders contracted for the first time since June 2013, when the Eurozone was emerging from its deep two-year recession. Indeed, the fear is that Europe will once again sink back into recession, with contracting levels of activity seen in four nations in September: Austria, France, Germany and Greece. Of particular note on this list was Germany, the largest economy in Europe. Real GDP was unchanged in the second quarter, down from 0.2 percent growth in the first quarter. Meanwhile, both industrial production and retail sales were higher in August. We will get new production data next week, and it is expected to be softer. For its part, the European Central Bank kept its monetary policies unchanged, but there is an expectation of further stimulus in the coming months.

Meanwhile, Brazil, Russia, India and China also continue to experience softness. Brazil shifted into its fifth contraction so far this year, but investors are cautiously optimistic about the upcoming runoff election between incumbent President Dilma Rousseff and Aécio Neves, who is favored by business leaders. Russia, India and China are growing, but just barely. China’s manufacturing sector has shown signs of stabilization, but stronger growth remains elusive. A number of key economic indicators in China have continued to decelerate this year, including industrial production, and it is likely that real GDP will decline from 7.5 percent growth in the second quarter to 7.3 percent in the third quarter. India’s PMI figure in September was at its lowest point this year, and Russian exports continue to fall. Nonetheless, it was not all bad news in the emerging markets. For instance, Indonesia, Turkey and Vietnam had their paces of new orders shift from negative to positive for the month, which bodes well for them.

The U.S. trade deficit narrowed marginally in August, although export growth remains sluggish so far this year. Looking at the top 10 markets for U.S.-manufactured goods, four countries (Brazil, Germany, Hong Kong and South Korea) experienced contracting levels of activity in September, which hampers our ability to sell products there. In addition, Canada, Japan and the United Kingdom also had marginally deteriorated demand and output in September, even as each continues to grow modestly. In contrast, manufacturing activity in Mexico and the Netherlands accelerated slightly in September.

U.S. trade negotiations in the Asia Pacific are moving forward with major meetings in Australia and China later this month and next. United States–European Union negotiations face increased controversy and new leadership at the EU Commission and Parliament. And, with the World Trade Organization’s Trade Facilitation Agreement facing a continued stalemate, there are efforts to move the information technology talks to a conclusion and engage in the detailed environmental goods talks. The U.S. Export-Import Bank was granted a nine-month extension, but manufacturers remain highly concerned that continued uncertainty will put U.S. exporters at a disadvantage in global markets. Efforts continue to move forward on a host of trade legislation, including Trade Promotion Authority, the Miscellaneous Tariff Bill, customs reauthorization and the Generalized System of Preferences.

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

markit pmi for top 10 markets - oct2014

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)


Timmons Brings Manufacturers’ Leadership Message to Detroit

NAM President and CEO Jay Timmons visited Detroit today to join top manufacturing leaders to discuss the manufacturing comeback. The event was part of the NAM’s nationwide Leadership Engagement Series focused on raising manufacturing interests by urging business leaders to get involved in the political process.

Manufacturers know that in order to build Michigan’s economy, we need more manufacturing.  One of the best ways to ensure

Timmons discusses Manufacturing Day on The Frank Beckmann Show.

Timmons discusses Manufacturing Day on The Frank Beckmann Show.

growth in the sector is through exports, which means it’s time for Congress to pass crucial measures such as a long-term reauthorization of the Export-Import Bank and Trade Promotion Authority. Manufacturers are doing their part in boosting the economy and creating jobs, and Congress needs do implement policies that help, not hamper, the industry’s ability to continue to prosper.

While in Detroit, Timmons also paid a visit to WJR-Radio where he visited The Frank Beckmann Show. During the interview, Timmons highlighted the recent success of Manufacturing Day, which hosted over 1,600 events in all 50 States, as well as Canada and Puerto Rico, and also discussed numerous issues that are on the minds of manufacturers across the country.

For more information about the Leadership Engagement Series, follow NAM on Twitter (@ShopFloorNAM) and visit NAM’s Election Center to get involved.

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


Busk v. Integrity Staffing

NAM has filed an amicus brief in support Supreme Court cert petition to review the 9th Circuit to decision issued in Busk v. Integrity Staffing.  The 9th Circuit concluded that time spent undergoing security checks is compensable under the Fair Labor Standards Act (FLSA).  NAM is arguing that the Supreme Court’s review is needed now to dispel the confusion, resolve the conflict, and confirm that the FLSA does not require employers to compensate employees for the time spent on activities before and after the work day.

We believe this is the Department of Labor’s attempt to expand the definition of what is an “Integral and indispensable “activity under FLSA to include activity’s such as changing into work uniforms and other ancillary activities relating to the preparation of conclusion of work.  The result is a decision that sows considerable confusion for the ever-increasing number of businesses, municipalities, and other entities that use security screenings as part of their ordinary course of business.

UPDATE: The Supreme Court will hear oral argument on this case tomorrow. The Manufacturers’ Center for Legal Action is pleased that the Court recognized the need for further review of this important case.

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)


President Obama Embraces Manufacturing Day

President Obama celebrates Manufacturing Day with a tour and a town hall meeting at NAM member Millennium Steel in Princeton, Indiana.

President Obama celebrates Manufacturing Day with a tour and a town hall meeting at NAM member Millennium Steel in Princeton, Indiana.

Manufacturing Day is a wonderful showcase for manufacturers to open their doors to students and local communities to show them how sleek, clean and technology driven manufacturing has become. NAM member Millennium Steel is doing the same – but they’ll have to opportunity to welcome a very special guest today – President Obama. The Princeton, Indiana manufacturer will host the President, along with twenty students from local universities, for a tour of their facilities.

After the tour, those students will join a larger group of invitees, including Millennium employees, suppliers and others, for a town hall meeting with the President.

In the first three years of Manufacturing Day, we have seen incredible growth. This year there will be more than 1,600 events – an 800% increase since the inaugural day in 2012. During his time in office, the President has continually talked up the importance of manufacturing to the United States.

This year for Manufacturing Day, he issued an official Proclamation stating, “Now, therefore, I, Barack Obama, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim October 3, 2014, as National Manufacturing Day. I call upon the people of the United States to observe this day with programs and activities that highlight the contributions of American manufacturers, and I encourage all Americans to visit a manufacturer in their local community.

Today is a celebration, and here at the NAM, we’re extremely proud of the manufacturers in the U.S. who are driving Manufacturing Day’s massive success.

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


The Manufacturing & Mining Link

Today, there is no question that manufacturing in the United States is making a comeback.

But one overlooked—and at risk—driver of this resurgence is the availability and stability of domestic mineral resources. Mined mineral resources are raw materials that support nearly every sector within the manufacturing industry, from the automotive to construction to defense and high-technology. Each sector is intrinsically dependent on minerals and by extension, the mining sector.

In a newly released study by the National Mining Association, U.S. Mines to Market, SNL Metals & Mining (SNL) looks at U.S. mined commodities’ domestic supply chains and the contribution of U.S. minerals to the manufacturing sector, identifying the risks faced by high-tech, energy, medical, national defense and automotive industries. Most notably, the study points out that mismatch exists between the domestic mineral supply and demand because of an inefficient permitting system that can delay the development of new mines by a decade or more.

The nature of manufacturing is that we rely on raw materials to create products. Often times the raw materials we need are not produced in this country and these sources can become unreliable. The inability to have access to a reliable source of raw materials is an impediment and a threat to continued and sustained U.S. economic growth. For instance, many manufacturers report being concerned with a dire need for infrastructure investment and spending in the U.S. and believe that an unstable supply chain of raw materials is “impairing reliability and increasing the cost of goods movement.”

As the U.S. manufacturing sector continues to grow, the importance of a secure and reliable domestic raw material supply has never been clearer – and with it, the need for a more efficient permitting process for new mineral mines that supports the country’s manufacturing industries. If we allow U.S. mining to perform to its full potential, our nation can enjoy enormous growth and job-creation opportunities, support the domestic manufacturing revival and attract global investment dollars.

Learn more at MineralsMakeLife.org

VN:F [1.9.22_1171]
Rating: 3.5/5 (2 votes cast)


A Manufacturing Blog

  • Categories

  • Connect With Manufacturers

            
  • Blogroll