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

The World Bank released a report yesterday that said the global economy appears to be transitioning toward a period of more stable, but slower growth. Some of the worldwide financial risks that existed a year or so ago—namely stemming from Europe—have lessened. Yet, more stability does not necessarily mean rapid growth. The World Bank forecasts global GDP growth of 2.2 percent in 2013, with faster growth of 3.0 percent and 3.3 percent in 2014 and 2015, respectively. These figures represent a modest pullback from earlier predictions, reacting to recent weaknesses in the marketplace. The United States is predicted to grow 2.0 percent this year, with 7.7 percent real GDP growth in China and the Euro area shrinking by 0.6 percent.

The latest data support this analysis. The JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) was somewhat higher, up from 50.4 in April to 50.6 in May. This suggests that the global economy is growing very slowly. The Eurozone showed some improvements, even as the continent remains mired in a recession and its PMI values have stayed below 50 for 22 consecutive months. The Canadian economy also rebounded, with its PMI data shifting from a slight contraction in March to modest growth in May. With Canada as our largest trading partner, increased activity north of the U.S. border will be important for reviving exports. Meanwhile, the Chinese economy, which had seen some progress since October in its production figures, began to slow down, with its PMI declining from 50.4 to 49.2. Several other industrial indicators also reflected some deceleration in activity in China.

Beyond economic indicators, there have been a number of headlines recently about volatility in the global equity markets. Traders appear to be reacting to the expected “tapering” of quantitative easing in the United States, and foreign exchange markets have also moved on interest rate and policy changes worldwide. Illustrating this point, the Dow Jones Industrial Average has shifted by over 122 points on average each day (both up and down) since Memorial Day, with wide swings in other markets, as well. (continue reading…)

Today Congressman Erik Paulsen (R-MN) joined the NAM’s India Task Force meeting to discuss the ongoing challenges resulting from India’s recent discriminatory trade practices. Paulsen and Congressman John Larson (D-CT) are circulating a letter urging Secretary of State Kerry to press for an end to this discrimination during his visit to India at the end of this month.

Congressman Erik Paulsen discusses India's discriminatory trade practices with manufacturers.

Manufacturers are already facing significant barriers to trade and India’s recent actions threaten the trade relationship with our fourth largest trading partner worth $60 billion just last year. The courts and policymakers in India are engaged in a persistent pattern of discrimination designed to benefits India’s economy at the expense of American jobs. Last week the NAM joined 16 other business groups in sending a letter to President Obama asking his Administration to directly engage the Indian government to stop these practices and to keep it from happening again in the future.

From the letter:

“These actions and others constitute a disturbing trend that may continue and even expand to other products, sectors, and countries.  Already there are indications that other countries are considering similar measures.  Such actions are completely at odds with recognized global norms and raise troubling questions about India’s compliance with its international obligations to protect ideas, brands, and inventions and to treat imported goods no less favorably than domestic products.”

The discussion with Congressman Paulsen today was a great opportunity for manufacturers to discuss the concerns about India with a member of the Ways and Means Committee. We will continue to urge members of Congress to ask the Administration to engage India’s government so we can protect American jobs.

The latest NAM/IndustryWeek Survey of Manufacturers found that rising health insurance costs topped the list of concerns this quarter. The issue was cited by 82.2 percent of respondents, higher than the 74.0 percent level observed in the first quarter survey.

A series of special questions on the Affordable Care Acts drilled further on this topic. Specifically, 99.0 percent of manufacturers surveyed said that they provide health insurance coverage to their workforce, with 38.0 percent of those self-insuring. The average health insurance premium increased 8.6 percent this year, with a whopping 13.9 percent predicted for next year. More than anything, the 2014 numbers suggest just how much uncertainty is out there regarding insurance rates, with the perception out there that they will go up significantly. Just 43.8 percent of manufacturers said that they were prepared to implement the ACA when it goes into effect starting later this year.

Looking at the current economic outlook, 72.3 percent of manufacturers said that they are either somewhat or very positive about their company’s outlook, up from 51.8 percent six months ago and 70.1 percent three months ago. With the exception of the December survey, optimism levels have been roughly 70 percent since September. In essence, this survey confirms the good-but-not-great nature of the current manufacturing economy, much as we have seen in the most recent Institute for Supply Management and employment numbers. Sales are expected to rise 2.7 percent over the course of the next 12 months. While this was higher than the 2.3 percent observed last time, it was still lower than the 4.3 percent observed one year ago. (continue reading…)

Here is the summary from this week’s Monday Economic Report:

On many levels, last week’s economic indicators confirmed weaknesses in the manufacturing sector. The Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) dropped below 50—the threshold for growth—for the first time since November. New orders and production levels contracted, with hiring stalled. Some respondents cited softness in export sales, while others noted weaker domestic demand stemming from government spending cuts, higher payroll taxes and other uncertainties.

On the trade front, manufactured goods exports have grown very slowly in 2013, up less than 1 percent in the first four months relative to the same time frame in 2012. In April, goods imports outpaced exports, widening the deficit from $37.1 billion to $40.3 billion. Europe’s recession, in particular, has decreased sales overseas for our products, with sluggish growth elsewhere in many of our key markets.

These struggles have lessened businesses’ ability to bring on new workers. Manufacturing employment fell by 8,000 workers in May, the third consecutive monthly decrease. The sector has added 41,000 net new employees over the course of the past 12 months, just 1.9 percent of all nonfarm workers created in the economy. That pace is disappointing and a sign that we need the manufacturing economy to flourish again. While manufacturers were making outsized gains to output and employment as recently as a year ago, that pace has stagnated since then. As NAM President and CEO Jay Timmons noted in February in Detroit, a flourishing sector would yield an average of 20,000 new manufacturing workers each month. (continue reading…)

Here is the summary from this week’s Monday Economic Report:

Manufacturing activity worldwide has slowed noticeably. Flash Purchasing Managers’ Index (PMI) data for China and the Eurozone both reflect contracting levels for new orders, exports and employment. Europe’s problems continue to deepen. Even with some slight easing of declining sales, May’s manufacturing PMI data mark the 22nd consecutive month of declining activity for the continent. Beyond falling activity levels, manufacturers have also reported the need to reduce the selling price for their goods. The news that China had once again slipped into negative territory was a little surprising, suggesting its economic growth has slowed again. Over the course of the next few weeks, international PMI data will come in, allowing us to see the widespread softness in the manufacturing sector. The most recent JPMorgan Global Manufacturing PMI suggested that growth worldwide was modest at best.

The Markit Flash U.S. Manufacturing PMI declined slightly from 52.0 in April to 51.9 in May, falling from 56.1 in January. One of the largest factors in May’s decline was the decrease in new export orders. Output and hiring also slowed, and domestic new orders have decreased since the beginning of the year. At the same time, the Chicago Federal Reserve Bank’s National Activity Index (NAI) declined in April, largely on weaknesses in industrial production in the early months of 2013. (continue reading…)

Yesterday we saw two very different takes on coal exports in a petition filed by environmental groups, and a study released by the National Mining Association.

Several environmental groups filed a petition with the Army Corps of Engineers (Corps) asking them “to evaluate the cumulative and related impacts of all proposed coal export terminals in Oregon and Washington in a single, comprehensive, area-wide environmental impact statement (“EIS”) under the National Environmental Policy Act (NEPA). Such a process will allow explicit consideration of the collective impacts of multiple distinct but related decisions.” Their message was clear, we don’t want you to do anything that involves fossil fuels.

The National Mining Association (NMA) released a report prepared by Ernst & Young LLP that explored the economic and jobs benefits of coal exports in 2011. The report estimated the economic value of related coal activity at $16.6 billion in 2011. They also estimated that 25,130 jobs or almost 19 percent of those working at coal mines were directly related to coal exports. The report sent an equally clear message, fossil fuels creates economic activity and jobs.

This petition by the environmental groups is an attempt to slow down the permitting process and to kill these export expansion efforts by delaying permits for years and by requiring huge expenditures by the private and public sectors. Expanding environmental review to include all of the Washington and Oregon proposals and their potential cumulative economic and environmental impacts across the region, the United States and the world, would be a drastic policy shift from current practices that would undermine national goals to boost exports.

A Programmatic EIS for coal export projects in the Pacific Northwest would create a major disincentive for manufacturers to export their products, impacting jobs and economic growth. This is exactly the effect these groups hope to have on these projects, and in fact most any other project that involves fossil fuels.

The NAM sent a letter to the Corps in June of 2012 urging them not to expand its NEPA analysis beyond the individual, project-specific review required under the statute. The NAM believes that by expanding this focus to include the environmental impact of the cargo, and all similar cargo transported through the region, the Corps could be laying the foundation for similar exercises for just about any port or rail expansion to transport any type of cargo. For instance, what if the cargo at issue was not coal but cars, or tractors, or even airplanes? Would the Corps need to perform a Programmatic EIS to determine the lifecycle environmental impact of that cargo? What if the cargo was an agricultural or animal product; should methane emissions be considered? The possibilities are endless and deeply troubling to manufacturers and their employees.

The latest Markit purchasing managers’ index (PMI) data reflect slower manufacturing activity worldwide in May, continuing a trend that we saw in April. Last month, the Chinese economy slowed surprisingly, with the HSBC China Manufacturing PMI falling from 51.6 in March to 50.4 in April. Now, we see that the Flash measure has fallen further to 49.6 in May, its first contraction since October. A decline in new orders, with the sales index down from 51.7 to 49.5, was largely responsible for the decrease in the larger index. Exports, employment, and inventories were also lower. With that said, overall manufacturing output was only off slightly (down from 51.1 to 51.0), with very modest growth.

While the Chinese decline was unexpected, the European data have been in contracting levels since August 2011, and it is not expected to emerge from its recession any time soon. Nonetheless, the Markit Flash Eurozone Manufacturing PMI did improve somewhat from 46.7 in April to 47.8 in May, even as it remains in contraction for the 22^nd consecutive month. The pace of new orders (including exports) and output slowed in the month, helping to ease the rate of decline. The bottom line, though, is the fact that production and employment in the manufacturing sector are falling. The survey also indicates that selling prices among manufacturers are also decreasing, with deflation occurring each month so far in 2013.

In contrast to China and Europe, manufacturing activity in the United States is growing, but very slowly. The Markit Flash U.S. Manufacturing PMI edged marginally lower from 52.0 in April to 51.9 in May, decelerating for the fourth straight month. This easing appears to have erased the stronger growth that we saw in the U.S. at the beginning of the year, when the PMI was 56.1. (continue reading…)

Earlier today, the Senate Finance Committee held a hearing on the Trade Facilitation and Trade Enforcement Act of 2013 (S. 662). The bill was introduced by Chairman Max Baucus and Ranking Member Orrin Hatch in March to help reduce costs and delays at the border by modernizing U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE), two key trade-related agencies. CBP is charged with facilitating imported cargo through U.S. ports of entry, enforcing trade and customs laws at the border, collecting customs revenue and enforcing import security laws to prevent illicit shipments from entering the United States.

As Chairman Baucus noted in his opening statement, about 365,000 entries move through U.S. ports – including more than 3,000 express entries – on a typical day. These goods arrive in more than 66,000 truck, rail and sea containers as well as hundreds of aircraft. “American businesses, ranchers, farmers and consumers depend on the timely movement of all these goods across borders to remain competitive. In business, time is money. So CBP and ICE must facilitate trade expeditiously,” Chairman Baucus said. In his opening statement, Ranking Member Hatch reiterated the importance of international trade to the U.S. economy and highlighted the need to protect intellectual property rights.

Manufacturers were represented at the hearing by Chrysler, Procter & Gamble and the National Electrical Manufacturers Association (NEMA). William Cook, Director of Worldwide Logistics and Customs for Chrysler, described the impact of delays at the border on Chrysler’s bottom line in his testimony. (continue reading…)

Recently the Sierra Club and other environmental groups sent several coal companies and BNSF Railway notice that they intend to file a lawsuit over coal dust from railway cars in the Pacific Northwest. The threat of this frivolous lawsuit only harms our economy and jobs in the Northwest.

Yesterday, The Seattle Times ran an op-ed from Roger McClellan, past chairman of the Environmental Protection Agency’s (EPA) Clean Air Scientific Advisory Committee and an expert on toxicology and human health-risk analysis, disputing these baseless claims. In the piece McClellan points out that the anecdotal evidence and the opinions of just a handful of people should not be used to sway the public when it comes the transportation of coal, but these decisions should be based on scientific evidence and facts.

Excerpt from the piece:

For starters, claiming that finding a piece of coal on the ground or in the water leads in a direct line to a health or environmental risk violates one of the basic tenets of toxicology and risk assessment — the mere presence of a substance does not indicate harm. There are other factors that need to be taken into account, the main one being exposure.

Just because a piece of coal is found in the water or coal dust is found near a rail track does not mean humans are exposed to it. Coal is not a substance that breaks down easily. Coal is relatively innocuous. Simply moving it by trains or trucks or barges does not equate to a risk to the environment or human health.

Coal continues to play an important role in meeting energy needs around the world, with steady improvements made in its transport and use. Coal has been transported through the Northwest by rail for decades and there has never been any evidence of harm associated with this rail transport.

As McClellan notes coal has been transported for decades through the Northwest by rail and there has never been any evidence associated moving the coal on the railways. Only when debate heated up over the coal export terminals has this become a hot topic for environmental groups. Thousands of jobs are on the line and the decision on the coal export terminals should be based on facts. We must work to reduce our export barriers for valuable exports like coal, not create new ones.

Yesterday, during a House Energy and Commerce Subcommittee hearing, former Sens. J. Bennett Johnston (D-LA) and Byron Dorgan (D-ND) stated their case for allowing the United States to export its vast energy reserves.  The Department of Energy is currently reviewing applications to export natural gas, and we expect a decision on at least some of the applications soon.  At the same time, the Army Corps is in various stages of permitting for expanded coal export capacity in the Pacific Northwest.  Both sets of export projects have received significant attention and scrutiny in Washington, D.C.

Sen. Dorgan spoke on behalf of the Bipartisan Policy Center (BPC), a nonprofit that boasts both Republican and Democratic members of Congress among its staff, as well as leaders from industry and environmental groups on its board of directors.

According to Sen. Dorgan, the BPC’s Energy Board reviewed the recent studies on the impacts of LNG exports and “concluded that domestic gas prices are more likely to drive export levels than exports are likely to determine domestic prices . . . that LNG exports are likely to have at most a modest impact on domestic natural gas prices—LNG exports will adjust as U.S. prices rise or fall.”  Dorgan went considerably broader than just natural gas, though.  He stressed: “restricting international trade in fossil fuels is not an effective policy to reduce global greenhouse gas emissions or to advance domestic economic interests, and we recommend against any such restrictions.”

That is precisely where the NAM stands on energy exports. Manufacturers fundamentally believe in free trade and open markets—a policy that extends to energy exports. We oppose bans or similar market-distorting barriers to our energy exports. We are pleased to see the BPC take the same stance.

Sen. Johnston, a Louisiana Democrat who spent 25 years in the U.S. Senate, put it eloquently:

“The free market might not always lead to everyone’s definition of the sweet spot, but experience has shown that it is a better allocator and regulator than bureaucrats and politicians. We should heed the admonition of Adam Smith that demand begets supply: Allow the free market to allocate the nation’s newfound energy bounty.”

Manufacturers believe in a true “all-of-the-above” energy strategy that embraces all forms of domestic energy production, including oil, gas, coal, nuclear, energy efficiency, alternative fuels and renewable energy sources. We are a country built on exports—the National Association of Manufacturers was founded because our members wanted to export—and we must continue to let the principles of free trade and open markets govern in the area of energy exports.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.