Tag: manufactured goods exports

The U.S. Economy Grew 3.5 Percent in the Third Quarter

The Bureau of Economic Analysis said that real GDP grew an annualized 3.5 percent in the third quarter, slightly higher than my forecast of 3.25 percent. This followed a decline of 2.1 percent in real GDP in the first quarter and a gain of 4.6 percent in the second quarter. As such, the U.S. economy grew a frustratingly slow 1.2 percent at the annual rate in the first half of 2014, which was a major disappointment. Still, consumer and business spending strengthened in the second quarter, and we continued to see gains in these areas in the third quarter, albeit with some easing in the pace of growth. In addition, after seeing net exports serve as a drag toward growth in the first half of the year, they were a positive contributor this time around, which was encouraging. (continue reading…)

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Monday Economic Report – September 8, 2014

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

The U.S. economy added 142,000 nonfarm payroll workers in August, a disappointing figure given signs of a rebound in many other indicators lately. The consensus expectation had been for nonfarm payroll growth to exceed 200,000 jobs for the seventh consecutive month, as was observed in the estimates provided by ADP the day before. Manufacturing employment was flat for the month, which was also a disappointment. It ended a 12-month streak of job gains for the sector, a period in which manufacturers added 168,000 net new workers. Hopefully, the August jobs report was just a brief pause in what otherwise had been positive news on the labor front.

The Institute for Supply Management’s (ISM) purchasing managers’ index (PMI) data provides much encouragement that manufacturing activity is moving in the right direction heading into the autumn months. The headline PMI figure rose from 57.1 in July to 59.0 in August, its highest level since March 2011, and it reflected a robust recovery from weaknesses earlier in the year. Indeed, new orders and production expanded at healthy paces. These findings mirror the latest NAM/IndustryWeek Survey of Manufacturers, which is being released this morning, showing respondents mostly upbeat about their own company’s outlook, with sales, capital spending and hiring expectations at two-year highs. Indeed, 87.3 percent of those taking the survey were either somewhat or very positive in their outlook, up from 85.9 percent three months ago. The data are largely consistent with 3.1 percent growth in manufacturing production over the next two quarters.

Manufacturers spent 4.4 percent more on construction projects in July, also providing some reassuring news. The sector has devoted 23.9 percent more to construction projects over the past 12 months, an indication that the increase in demand and output observed over that time frame has resulted in a jump in new investments. Meanwhile, new factory orders data provided mixed news. While orders increased by a whopping 10.5 percent in July, much of that stemmed from highly volatile nondefense aircraft sales. Excluding transportation orders, new factory orders declined 0.8 percent for the month, a finding that we had noted in the earlier release of preliminary durable goods data. Still, factory orders excluding transportation have risen 2.7 percent over the past six months (since weather-related declines in January), which mostly mirrors the more positive data in other releases.

Looking at exports, the U.S. trade deficit narrowed ever-so-slightly in July, with an increase in goods exports marginally offsetting an increase in goods imports. Yet, manufactured goods exports have risen only slightly year-to-date, up just 0.8 percent so far in 2014 using non-seasonally adjusted data. On the other hand, these same figures show that exports to our top five exports markets were higher through the first seven months of this year relative to last year. Regardless, manufacturers hope that the pace of export growth accelerates, with sluggish sales frustrating business leaders and net export growth providing a drag on real GDP over the past two quarters.

This week, we will get new data on consumer confidence, job openings, retail sales and small business optimism. Markets will also continue to digest Friday’s employment numbers, trying to decipher if they were an aberration or a sign of larger weaknesses. In particular, this discussion centers on how the Federal Reserve will interpret such things, with a debate already ongoing as to when the Federal Open Market Committee will begin to increase short-term interest rates. Conventional wisdom holds that short-term interest rates will rise sometime in 2015, but whether that occurs earlier or later in the year is up for debate between those who are more hawkish or dovish on inflation. In the Beige Book, which was released last Wednesday, the Fed mostly observed progress in the economy in recent months, including in manufacturing. Yet, as long as the Fed continues to see “slack” in the labor market, it might be less willing to normalize rates.

Chad Moutray is the chief economist, National Association of Manufacturers. 
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U.S. Trade Deficit Narrowed Ever-So-Slightly in July

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit narrowed ever-so-slightly, down from $40.81 billion in June to $40.55 billion in July. This was the smallest trade deficit since January’s $39.18 billion level. The smaller July figure stemmed from higher goods exports (up from $136.82 billion to $138.57 billion) that were enough to offset an increase in goods imports (up from $197.23 billion to $198.77 billion). The service-sector trade surplus also widened marginally (up from $19.60 billion to $19.65 billion).

While the deficit was little changed for the month, the breakouts show that the increases in goods exports and goods imports resulted from both petroleum and non-petroleum trade flows. For instance, petroleum exports increased $1.12 billion in July, with non-petroleum exports up by $937 million. Similarly, petroleum imports rose by $915 million, and non-petroleum imports increased by $714 million.

Digging even deeper into the data, there were increased goods exports observed in the automotive vehicles and parts (up $1.66 billion), industrial products and materials (up $1.26 billion) and non-automotive capital goods (up $427 million) sectors. Most of the gain in industrial products and materials came from petroleum. In contrast, exports were lower for consumer goods (down $650 million) and foods, feeds and beverages (down $632 million).

Goods exports to our top 5 export markets for U.S.-manufactured goods were higher through the first seven months of this year relative to the same time frame last year. This included (using non-seasonally adjusted data):

  • Canada (up from $174.66 billion to $180.62 billion)
  • Mexico (up from $130.31 billion to $139.10 billion)
  • China (up from $63.69 billion to $67.96 billion)
  • Japan (up from $37.41 billion to $38.76 billion)
  • Germany (up from $27.38 billion to $29.41 billion)

That is encouraging news, particularly given recent weaknesses in growing export sales. Overall, manufactured goods exports have increased from $684.84 billion year-to-date in 2013 to $690.41 billion in 2014 (non-seasonally adjusted). This represents an increase of just 0.8 percent from last year, which would be a deceleration from last year’s 2.4 percent pace. Note, however, that seasonally adjusted data on Trade Stats Express show a somewhat better rate for the first half of 2014, with 1.7 percent growth through the first two quarters of the year.

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

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Monday Economic Report – August 11, 2014

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

In a light week for economic indicator releases, geopolitical events dominated the headlines and moved equity markets. With U.S. airstrikes in Iraq, battles between Israel and Hamas in the Gaza Strip, and mounting tensions with Russia, financial markets have a lot to absorb, with uncertainty sending stock values lower. Even with a triple-digit gain on Friday, the Dow Jones Industrial Average has fallen 3.5 percent since hitting an all-time high of 17,138.20 on July 16. From an economic perspective, geopolitical challenges could put downward pressure on forecasts for the second half of 2014 depending on how they evolve in the coming days and months. Absent these global anxieties, manufacturers have tended to be mostly upbeat about the next six months, and several recent data points have suggested rebounding demand and output as we began the third quarter.

New factory orders have risen in four of the past five months, increasing 1.1 percent in June and 4.6 percent since January. With that said, year-over-year growth has been less robust, up just 1.5 percent. This shows the extent to which winter weather weakened sales earlier this year. Still, June’s new factory orders figure of $503.2 billion reached an all-time high, which was encouraging. This data is largely consistent with positive news of late on real GDP, manufacturing sentiment surveys, and hiring. Indeed, manufacturing labor productivity increased by a relatively healthy 3.6 percent in the second quarter, lifted by robust gains in output. Unit labor costs declined 1.3 percent, with durable goods industries accounting for much of that decrease. Productivity gains since 2009 have helped to keep the sector more competitive globally, particularly for durable goods firms.

In June, the U.S. trade deficit fell to its smallest level since January, as goods imports declined at a faster pace than goods exports increased. Nonetheless, we continue to see relatively slow growth for U.S.-manufactured goods exports, which have increased 1.7 percent year-to-date. Ideally, we will see improvements moving into the second half of the year, as the current pace represents a deceleration from last year’s 2.6 percent rate of growth. Of course, challenges abound on this front, with news of weak growth in Europe, flat export sales growth to our largest trading partner Canada, and decelerating growth rates in China.

This week, we will get new industrial production figures for July. We anticipate manufacturing output growing for the sixth straight month, modestly extending upon the 3.1 percent growth observed since January. The New York Federal Reserve Bank’s Empire State Manufacturing Survey is also expected to show continued expansion for the sector in its district. Other highlights this week include the latest data on consumer sentiment, job openings, producer prices, retail sales, and small business optimism.

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

labor productivity - aug2014

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Global Manufacturing Economic Update – August 8, 2014

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

The International Monetary Fund (IMF) predicts that world output will grow 3.4 percent in 2014, down from 3.7 percent in its April forecast. Much of the downward movement stems from weaker-than-expected data from the first quarter. In the United States, for instance, real GDP declined by a disappointing 2.1 percent, and even with a rebound in the second quarter, the economy expanded by just 0.9 percent in the first half. Fortunately, manufacturers are mostly upbeat about the second half, and the IMF predicts 1.7 percent and 3.0 percent growth in the United States for 2014 and 2015, respectively. Europe is anticipated to grow 1.1 percent this year, and the Chinese economy should increase by 7.4 percent. While the emerging markets as a whole have started to see signs of improvement, notable weaknesses still exist in Brazil, Russia and South Africa, to name just a few. Geopolitical risks abound, of course, with crises around the world also negatively impacting activity.

The good news is that global manufacturing activity continues to expand modestly, with the pace little changed in July from June. New orders, production and employment growth slipped a little for the month, but exports picked up. In July, 8 of the top 10 markets for U.S.-manufactured goods had expanding economies, with Brazil and South Korea contracting once again. Among the expanding nations, Canada and China saw accelerating levels of manufacturing demand and production in July, with relatively decent growth seen in both the Netherlands and the United Kingdom. At the same time, manufacturers in the United States have continued to rebound from softness earlier in the year. The Institute for Supply Management’s Manufacturing Purchasing Managers’ Index (PMI) increased to its highest level since November on strong output and sales growth.

The Chinese economy has begun to stabilize, with manufacturers in China expanding for the second straight month. New orders, exports and production growth all strengthened in July, and we anticipate a pickup in industrial production and fixed-asset investment rates when they are released next week. China’s real GDP has increased slightly, from 7.4 percent at the annual rate in the first quarter to 7.5 percent in the second quarter. Meanwhile, Eurozone manufacturers have now expanded for 13 straight months, but activity has decelerated since January. Confidence measures have weakened, year-over-year inflation remains very low and the unemployment rate stayed elevated (even as it fell to 11.5 percent). Still, the latest industrial production and retail sales have reflected a rebound.

In general, we have seen the U.S. trade deficit narrow over the past couple years as we have become less dependent on foreign sources of energy. In June, the trade deficit was at its smallest level since January, as goods imports declined at a faster pace than goods exports increased. Still, we continue to see relatively slow growth for U.S.-manufactured goods exports, which have increased 1.7 percent year-to-date. Ideally, we will see improvements moving into the second half, as the current pace represents a deceleration from last year’s 2.6 percent rate of growth.

The last month saw important progress in ongoing trade negotiations with Europe and 11 Pacific Rim nations, as well as environmental goods talks in the World Trade Organization (WTO). However, India and others successfully blocked agreement on a global trade facilitation package that would add an estimated $1 trillion to the world economy, potentially setting up a last-ditch effort to revive the deal in September. Responding to rising tensions in the Ukraine, the United States and the European Union (EU) imposed fresh sanctions on Russia in the financial, energy and defense sectors.

With Congress now in recess for the month of August, manufacturers are engaging Senators and Representatives in their states and districts and gearing up for action in the fall on a range of stalled trade measures—including reauthorization of the Export-Import Bank, Trade Promotion Authority, a miscellaneous tariff bill and the Generalized System of Preferences. A House bill that would provide access to federal civil enforcement for trade secrets theft is fast gaining cosponsors, laying the groundwork for a Judiciary Committee markup and possible passage in September. The planned official visit of India’s new Prime Minister, Narendra Modi, to Washington at the end of next month will provide another opportunity to address outstanding trade and investment barriers in that important market.

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

manufactured exports growth - aug2014

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Global Manufacturing Economic Update – July 11, 2014

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

The global economy improved slightly in June, showing some signs of stabilization from weaknesses in prior months. The J.P. Morgan Global Manufacturing Purchasing Managers’ Index (PMI) increased from 52.1 in May to 52.7 in June, its fastest pace since February. Various measures of activity were mostly higher, including new orders, production and employment. Behind this figure, the data also reflected economic progress in countries such as China, Hong Kong and Japan, each of which shifted from a contraction in May to slight growth in June. As a result, just 2 of the top 10 markets for U.S.-manufactured goods had PMI values below 50 in June, an improvement from the five that registered contracting levels in May. Our largest trading partner’s values, the RBC Canadian Manufacturing PMI, increased from 52.2 to 53.5, reaching its highest point since December.

Europe dominated economic headlines on July 10, with worries about a large Portuguese bank and falling industrial production figures for France (down 1.7 percent), Germany (down 1.8 percent) and Italy (down 1.2 percent). Indeed, European growth has continued to ease, with the Markit European Manufacturing PMI down from 52.2 to 51.8. On the positive side, manufacturing activity has now expanded for 12 straight months, but the economy in the Eurozone remains subpar overall. Real GDP was up just 0.2 percent in the first quarter and is expected to increase around 1 percent in 2014 as a whole. Still, growth varied widely from country to country. France sits on one end of the spectrum, with manufacturing sentiment worsening and falling to a six-month low. Meanwhile, Ireland and Spain experienced multiyear highs for sales growth, and new orders in the United Kingdom expanded rather robustly (up from 59.5 to 61.0).

In the emerging markets, manufacturers in Brazil, Russia, South Korea and Turkey reported contracting levels of activity in June, although Russian production grew for the first time in six months and South Korean exports began to stabilize. Overall, however, manufacturing activity in the emerging markets expanded for the second straight month, spurred higher by better news in some Asian economies. Stronger sales and output resulted in increased manufacturing PMI data for China, India, Indonesia and Taiwan. India also benefited from greater export growth. Next week, we will get new data on Chinese GDP, industrial production, fixed-asset investment and retail sales. Real GDP is expected to pick up slightly, from the 7.4 percent annualized growth rate experienced in the first quarter, with a consensus estimate of around 7.5 percent. While this is a marginal improvement, it also continues to reflect decelerating rates of growth from what was experienced in the past.

Looking at U.S. trade flows, petroleum helped to narrow the U.S. trade deficit in May, with more exports and fewer imports improving the headline figure. This continues a trend seen over the past few years whereby improved energy production in the United States has slightly helped balance the trade picture. Outside of petroleum, the numbers were less favorable. The average monthly deficit so far in 2014 reached $43.65 billion, higher than the $39.70 billion average for all of 2013. In addition, U.S.-manufactured goods exports continue to grow at a disappointing rate, up just 0.5 percent year-to-date versus this time last year using non-seasonally adjusted data. Nonetheless, exports of manufactured goods increased to all five of our largest trading partners through the first five months of this year: Canada, Mexico, China, Japan and Germany. That is an encouraging sign, even if we would like to see faster growth in our international sales overall.

On the policy front, the congressional debate on reauthorization of the Export-Import (Ex-Im) Bank continues to move forward, while action on other trade legislation is currently stalled. The World Trade Organization (WTO) officially began environmental goods negotiations, while both the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (T-TIP) continue. The U.S. trading relationship with key partners, including India, China and Russia, continues to be a focus.

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

china pmi - jul2014

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Monday Economic Report – June 9, 2014

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

The latest NAM/IndustryWeek Survey of Manufacturers—being released today—found that roughly 86 percent of manufacturers were either somewhat or very positive about their own company’s outlook, essentially unchanged from three months ago. Yet, the underlying data show higher levels of anticipated activity across the board over the next 12 months. For instance, sales are expected to grow 4.1 percent on average over the next year, up from an average of 3.6 percent in the last survey and the fastest pace in two years. Capital spending and hiring plans were also anticipated to increase, with almost half of respondents planning to add workers in the coming months.

Nonetheless, the survey also found that manufacturers remain frustrated with the slower-than-expected pace of economic growth this year and with the political process. The top challenges continue to be health care costs, the tax and regulatory environment and the skills gap. Along those lines, the Federal Reserve’s Beige Book reported that manufacturing activity expanded across the country in its analysis, with rebounds noted in many of its districts. In addition, several businesses are having difficulty finding skilled workers, a challenge that has concerned manufacturers for some time. For instance, a recent study from Accenture and the Manufacturing Institute found that more than 75 percent of manufacturers have a moderate to severe shortage of skilled resources.

Several data releases last week support the view that the economy is rebounding. For instance, the number of nonfarm payroll workers rose by 217,000 in May, with an average of 231,000 over the past four months. This helped push nonfarm payrolls over its pre-recessionary levels for the first time—a feat that took roughly five years. The news for manufacturers was more mixed. While manufacturing has averaged just shy of 12,000 additional workers per month since August, the pace has slowed this year, and May’s 10,000-worker gain stemmed mainly from durable goods firms. We would like to see broader-based job increases in the sector moving forward, with monthly hiring growth between 15,000 and 20,000 on average.

Meanwhile, the Institute for Supply Management’s Purchasing Managers’ Index (PMI) has risen each month since January, up from 54.9 in April to 55.5 in May. The data were mostly positive, with higher levels for both new orders (up from 55.1 to 56.9) and production (up from 55.7 to 61.0). The output index exceeded 60—signifying strong monthly gains—for the first time since December. At the same time, new factory orders increased for the third straight month, up 0.7 percent in April and building on healthy figures for both February and March. This release was another sign of recovery in manufacturing sales after weather-related softness in December and January. Yet, the underlying data also indicated some weaknesses beyond defense capital goods spending. Excluding defense, new durable goods orders would have shrank by 0.1 percent for the month. As such, there is room for improvement even with the recent rebound in activity.

While total construction spending increased for the third straight month, manufacturing construction declined 1.1 percent in April, and it has been down slightly since December. Still, the longer-term trend remains more encouraging, up 7.3 percent year-over-year. On the trade front, manufactured goods exports have seen marginal gains so far in the early months of 2014 relative to 2013, but we have seen increased exports in each of the top-five export markets so far this year. Still, export growth has been disappointing of late, and due to a significant increase in goods imports in April, the trade deficit rose to its highest level in 12 months. One positive continues to be energy, with the petroleum trade deficit narrowing on increased exports and fewer imports.

This week, we will get new data releases for consumer confidence, job openings, producer prices, retail trade and small business sentiment. In particular, we will see if Americans are becoming more confident and if the rebound will translate into increased purchasing. The expectation is that May retail sales will bounce back from slower April numbers. Regarding inflation, producer prices in April were higher mainly due to increased costs for food—namely, meat, eggs and dairy products. Energy costs were also up a bit. Analysts will be looking to see if core inflation creeps ever closer to the Federal Reserve’s 2 percent goal, which is anticipated.

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

nam industry week - jun2014

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U.S. Trade Deficit Widened to its Highest Level in Two Years

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit widened from $44.18 billion in March to $47.24 billion in April, its highest level since April 2012. The trade deficit has edged higher each month since November, when it hit a four-year low of $35.97 billion. Over that time frame, we have seen goods imports rise from $191.52 billion to $200.90 billion, essentially explaining much of the shift over the past five months. At the same time, goods exports declined slightly from $136.75 billion in November to $135.11 billion in April.

The goods trade deficit increased from $62.52 billion in March to $65.79 billion in April. This was due to mainly non-petroleum forces, as the petroleum trade deficit narrowed from $19.03 billion to $18.00 billion. Petroleum exports rose by $355 million in the month, with petroleum imports declining by $666 million. This continues a trend seen over the past couple years whereby improved energy production in the U.S. has slightly helped the trade balance picture.

Looking specifically at goods exports by sector, there were declining levels of exports for non-automotive capital goods (down $303 million); foods, feeds and beverages (down $262 million); automotive vehicles and parts (down $173 million); and consumer goods (down $87 million). The one major area with export growth in April was industrial supplies and materials (up $237 million), boosted by fuel oil (up $632 million), organic chemicals (up $343 million) and natural gas (up $128 million).

Meanwhile, year-to-date growth in manufactured goods exports increased from $384.70 billion in 2013 to $385.79 billion (using non-seasonally adjusted data), or a gain of 0.3 percent. As such, export growth for manufacturers continues to be lower than desired, with weaker global economic activity impacting our ability to grow international sales. (Note that using seasonally-adjusted data from Trade Stats Express, manufactured goods exports growth was slightly higher for the first quarter of 2014, up 1.1 percent over last year, but still disappointing.)

Still, we have seen increased exports in each of our top 5 export markets in the first four months of this year relative to the same time frame last year: Canada (up $98.96 billion to $99.62 billion), Mexico (up from $73.50 billion to $77.28 billion), China (up from $37.00 billion to $40.09 billion), Japan (up from $20.79 billion to $22.22 billion), and Germany (up from $15.84 billion to $16.98 billion). Each of these figures is not seasonally-adjusted.

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

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Monday Economic Report – May 12, 2014

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

In her testimony before the Joint Economic Committee last Wednesday, Federal Reserve Chair Janet Yellen discussed progress to date in the economy since the recession and touched on some of the weaknesses during the first quarter of this year. Specifically, she said the following:

Although real GDP growth is currently estimated to have paused in the first quarter of this year, I see that pause as mostly reflecting transitory factors, including the effects of the unusually cold and snowy winter weather. With the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already under way, putting the overall economy on track for solid growth in the current quarter. One cautionary note, though, is that readings on housing activity—a sector that has been recovering since 2011—have remained disappointing so far this year and will bear watching.

The Federal Reserve expects real GDP to grow 2.8 percent to 3.0 percent this year, and for that to happen, it would suggest a relatively strong rebound in activity in the coming months. This is particularly true given the stagnant growth in the first quarter. Nonetheless, the Federal Open Market Committee continues to worry about sufficient “slack” in the labor market, even with recent progress. Weak manufacturing job openings figures tend to support this view. Yellen testified that “a high degree of monetary accommodation remains warranted.” The Federal Reserve is expected to maintain historically low short-term interest rates for the foreseeable future, with rates starting to rise sometime in 2015. Regarding its asset purchasing program, it is anticipated to wind down by this autumn.

Consumers, meanwhile, remain hesitant to take on too much credit card debt, a deleveraging trend that we have seen throughout the economic recovery. While consumer credit outstanding rose 6.7 percent in March, the bulk of that increase stemmed from gains in nonrevolving loans. Nonrevolving credit, which includes auto and student loans, has increased 7.8 percent over the past 12 months. Yet, revolving credit, which includes credit cards and other credit lines, was up just 0.85 percent year-over-year. However, consumers are continuing to increase their spending, but they might be dipping into savings more to make these purchases, with the savings rate down to 3.8 percent in March. This was off from an average of 5.3 percent and 4.5 percent in 2012 and 2013, respectively.

On the trade front, manufactured goods exports have risen at a very slow 1.1 percent pace in the first quarter relative to the same time frame in 2013. This continues the deceleration in the growth rate for manufactured goods exports that we have seen over the past two years, with 2014 year-to-date growth down from last year’s 2.4 percent pace. On the positive side, exports of U.S.-manufactured goods to many of our largest trading partners rose in the first quarter of 2014. However, exports to our largest trading partner (Canada) remain soft, down 0.4 percent in the first three months of this year versus last year. We remain hopeful that exports will improve in the coming months. For more on international trends, see the latest Global Manufacturing Economic Update, which was released on Friday.

There will be a lot of new data out this week to digest. Several indicators will show the health of the manufacturing sector in the United States, including April readings on industrial production and new May surveys from the New York and Philadelphia Federal Reserve Banks. They are expected to show modest pickups in demand and output, building on recent rebounds. The other key figure to watch—particularly with the attention given to it in Yellen’s testimony and in the media—will be housing starts. Consensus estimates for new residential construction reflect some easing from March’s 946,000 unit annualized pace, probably down to around 910,000 to 920,000. Other highlights this week include new data on consumer confidence, consumer and producer prices, retail sales, small business sentiment and state employment.

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

top export markets growth YTD - may2014

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Global Manufacturing Economic Update – May 9, 2014

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

The global economy continues to expand, boosted by strengths in North America and Europe. Yet, there are also notable weaknesses, particularly in Asia and South America, where growth is decelerating. As a result, four of the top 10 markets for U.S.-manufactured goods experienced declining manufacturing activity levels in April, up from two in March. The four countries with manufacturing contractions were Brazil, China, Hong Kong and Japan. Fortunately, our two largest trading partners—Canada and Mexico—expanded modestly in April, albeit at a slower pace than a few months ago. At the same time, the fastest pace of growth among our top trading partners was in Europe, including the United Kingdom and Germany.

Reflecting some of the softness abroad, the JPMorgan Global Manufacturing Purchasing Managers’ Index (PMI) declined for the second straight month in April (down from 52.4 to 51.9), its lowest point since October. Even with the easing, growth in manufacturing demand and output remained positive, increasing modestly. Roughly one-quarter of the global PMI data stems from activity in the United States, which continues to see a rebound from winter-related slowdowns earlier in the year. In fact, Markit reported that production growth (up from 57.5 to 58.2) was at its highest level since March 2011. Nonetheless, even with recent progress, the U.S. market continues to have its challenges, with stagnant real GDP growth in the first quarter, mixed news about the labor market and lingering uncertainties about the economy and government policies.

Most notably, one of the larger U.S. concerns so far this year has been export growth. Manufactured goods exports in the first quarter rose just 1.1 percent relative to the first three months of 2013, continuing a trend of decelerated growth in international sales over the past two years. On the positive side, manufactured goods exports achieved an all-time high last year, with $1.38 trillion in goods sold overseas. We remain hopeful that the export market will pick up in the coming months. Moreover, most of our top markets saw modest gains year-to-date relative to the same time frame last year. The exception is Canada, our largest trading partner, with exports down 0.4 percent year-to-date.

Trade negotiations and legislation as well as NAM trade events are top of mind this month, aptly designated as World Trade Month (an annual designation by the President). Debate on Capitol Hill is heating up on the reauthorization of the Export-Import (Ex-Im) Bank, a top priority of manufacturers, and efforts also continue to move forward the Miscellaneous Tariff Bill (MTB), which expired more than 17 months ago. Bilateral and plurilateral discussions on the Trans-Pacific Partnership (TPP) talks as well as U.S.–EU trade negotiations are also ongoing.

On key policy issues, manufacturers won a partial victory on conflict minerals, but are awaiting action on their request to stay the May reporting deadline. The Obama Administration released its annual report on intellectual property (IP) rights overseas, echoing manufacturers’ concerns in several countries, including China, Russia, Brazil, India, Canada and others. In April, Sens. Chris Coons (D-DE) and Orrin Hatch (R-UT) introduced new trade secret legislation, on which manufacturers are seeking action.

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

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