Tag: output

Monday Economic Report – August 18, 2014

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

While geopolitical events continue to provide significant downside risks to the economy, recent data suggest that manufacturers in the United States are faring better this summer. Manufacturing production increased 1.0 percent in July, helping to lift the year-over-year pace of manufacturing output to 4.9 percent, its fastest annual pace since June 2012. Last month’s gain stemmed largely from increased motor vehicle production, with all but three of the major manufacturing sectors notching higher output levels for the month. At the same time, the utilization rate for manufacturers increased to 77.8 percent, nearly reaching pre-recessionary capacity levels.

Similarly, the Empire State Manufacturing Survey reflected strong growth in August, albeit less so than the robust levels observed in July. More importantly, respondents to the New York Fed’s survey were significantly more upbeat, with roughly 60 percent anticipating higher sales and output over the next six months. This study also reported that approximately 30 percent of manufacturers in its district planned to hire more workers and invest in additional capital expenditures in the coming months. This is welcome news, and it was largely consistent with the recent pickup in the labor market. Manufacturing job openings increased in June to their highest level in two years, with net hiring also accelerating. Of course, we already knew that to some extent. The most recent employment data found that manufacturers hired an additional 22,000 workers on average from May to July.

Meanwhile, the European economy has shown signs of backtracking, with real GDP in the Eurozone remaining unchanged in the second quarter. Germany’s economy contracted by 0.2 percent, helping to push the continent’s growth figure lower, but Italy (also down 0.2 percent) and France (flat for the second straight quarter) were also weak. In addition, industrial production has decreased in three of the past four months, with output unchanged year-over-year. We will get our first look at August purchasing managers’ index (PMI) data this week. The Markit Eurozone Manufacturing PMI report in July provided mixed news, with activity expanding for 13 straight months but growth continuing to ease over the course of this year. The latest data suggest that Europe’s economic challenges are still not behind them.

To some extent, that is true in the United States as well. We have seen improvements in a number of economic indicators, and yet, there are also persistent worries about future growth. Some of this could stem from global anxieties, but it could also be a function of disappointment with the lack of growth in the first half of the year. Preliminary consumer sentiment data from the University of Michigan and Thomson Reuters appears to pick up on this nuance, with Americans less confident once again in their forward-looking expectations. Indeed, retail sales data also reflect cautiousness on the part of the consumer, with spending unchanged in June.

This week, we will get additional insights about the health of the manufacturing sector worldwide. In addition to new PMI data for Europe, Markit will also release flash reports for China, Japan and the United States. While China’s economy had begun to stabilize in July, last week we learned that Japan’s real GDP contracted by 1.7 percent in the second quarter, or 6.8 percent year-over-year. Closer to home, the Federal Reserve will release the minutes of its July 29–30 Federal Open Market Committee meeting. Analysts will be looking for clues about when the Fed plans to start normalizing short-term rates. The Fed received good news last week with an easing in producer prices in July from recent highs, and this should help to alleviate some of the immediate pressure from inflation hawks, at least for now. Other highlights this week include the latest data on consumer prices, housing starts and permits, leading indicators and Philadelphia Fed manufacturing sentiment.

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

manufacturing production - aug2014

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Manufacturing Production Rose One Percent in July, with Capacity Reaching a Six-Year High

Manufacturing production increased 1.0 percent in July, its fastest pace since February’s post-weather rebound earlier in the year. The jump in output helped to lift the year-over-year pace of manufacturing production to 4.9 percent, its fastest annual rate since June 2012. As such, it illustrates the recover in output in the sector since the winter months, with the year-over-year pace up from 1.5 percent in January.

Meanwhile, manufacturing capacity utilization increased from 77.2 percent in June (and just 75.5 percent in January) to 77.8 percent in July. This suggests that utilization rates for manufacturers have nearly reached their pre-recessionary levels, with July’s rate the highest level since February 2008.

Looking at sectoral performance, durable and nondurable goods output were both higher, up 1.7 percent and 0.3 percent, respectively. The largest increase stemmed from motor vehicle production, which increased by a whopping 10.1 percent in July, recovering from being flat in June. On a year-over-year basis, motor vehicles and parts output has risen 21.9 percent. This reflected the sizable gain in 2014, but it was also a function of softness in 2013 due to the sector gearing up for a new model year.

Other sectors with notable increases in July included apparel and leather (up 1.8 percent), textile and product mills (up 1.7 percent), furniture and related products (up 1.4 percent), petroleum and coal products (up 1.3 percent), nonmetallic mineral products (up 1.0 percent), primary metals (up 1.0 percent), machinery (up 0.9 percent) and computer and electronic products (up 0.8 percent). In contrast, just 3 of the 19 major sectors had declining production for the month, and these were: miscellaneous durable goods (down 0.8 percent); food, beverage and tobacco products (down 0.3 percent); and plastics and rubber products (down 0.3 percent).

On a year-over-year basis, durable goods production has risen by a healthy 8.2 percent since July 2013, with nondurable goods output up 2.1 percent. The five sectors with the fastest growth over the past 12 months include: motor vehicles and parts (up 21.9 percent), furniture and related products (up 9.2 percent), machinery (up 8.3 percent), plastics and rubber products (up 7.4 percent) and nonmetallic mineral products (up 7.3 percent).

Meanwhile, overall industrial production rose 0.4 percent in July, equaling the increase seen in June. It was the sixth straight monthly gain in production, following January’s weather-induced decline. Since January, industrial output has risen 3.0 percent, with 5.0 percent growth year-over-year. Mining production increased 0.3 percent, but utility output continues to soften, down 3.4 percent for the month. Total capacity utilization increased from 79.1 percent in June to 79.2 percent in July, its highest rate since June 2008.

In conclusion, manufacturers continue to expand strongly in July, recovering from weaknesses earlier in the year. Moreover, surveys suggest optimism for the months ahead, including respondents from the Empire State Manufacturing Survey released this morning. Yet, manufacturing leaders have also been disappointed with the slow pace of growth in the first half of this year, and their upbeat sentiment about the second half remains is filled with caution. For that reason, policymakers should focus on those initiatives which will keep the economy growing moving forward.

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

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Continued Progress in China and the U.S., with Europe and Japan Growing More Modestly

The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) expanded for the second straight month in July, rebounding from softness from January through May. The headline index rose from 50.7 in June to 52.0 in July, its highest level since March 2011. The underlying data were mostly higher, including new orders (up from 51.8 to 53.7), output (up from 51.8 to 52.8) and exports (up from 50.6 to 52.7). The sales pace was the fastest since January 2011, and each of these measures are a sign that recent stimulative actions taken by the Chinese government have had a positive impact. Some downsides in the PMI survey contracting hiring rates for the 16th consecutive month (up from 48.7 to 49.5) and slightly accelerated raw material prices (up from 50.8 to 52.9).

Meanwhile, Japanese manufacturing activity also expanded for the second straight month, but it eased slightly in July. The Markit/JMMA Flash Japan Manufacturing PMI declined from 51.5 to 50.8. The recent uptick in activity has materialized as the Japanese economy has recovered from an increased in taxes that went into effect on April 1st. Still, manufacturers in the country cannot cheer yet, as output growth came to a halt in July (down from 51.8 to 50.0, or neutral). Other indicators were mixed. Export sales (up from 49.0 to 51.6) and employment (up from 49.8 to 50.8) both shifted to positive growth, but the pace of new orders decelerated somewhat (down from 52.0 to 51.1).

In other news, the Markit Flash Eurozone Manufacturing PMI edged marginally higher, up from 51.8 to 51.9. The Flash Eurozone PMI Composite PMI was up more strongly, increasing from 52.8 to 54.0, suggesting healthier growth in the service sector. For manufacturers, the data suggest slightly faster growth in production (up from 52.8 to 53.0) and exports (up from 52.4 to 52.7), but the pace of growth for new orders (51.9) and employment (50.3) were unchanged.

Overall, these figures provide a limited degree of encouragement for the manufacturing sector in Europe, which has worried of late about slow economic and income growth. It is also still clear that the data vary on country-by-country basis, with German manufacturing activity (up from 52.0 to 52.9) accelerating in July but with French manufacturers noting yet another deterioration in sales and output. Indeed, the French economy remains in a rut, with manufacturing activity positive in just three months since January 2013.

Closer to home, the Markit Flash U.S. Manufacturing PMI decreased from 57.3 to 56.3. Despite the slight easing in July, manufacturing activity continues to grow at relatively decent rates. Through the first seven months of 2014, the top-line index has averaged 55.9, stronger than the 53.5 average noted for 2013 as a whole. The July data show both new orders (down from 61.7 to 59.8) and output (down from 61.0 to 60.4) growing at a healthy paces, albeit with some deceleration for the month. Yet, hiring growth remains more modest (down from 53.8 to 52.1) and export sales (down from 50.9 to 50.6) were just barely growing, suggesting that there remains room for improvement.

Flash data give us an advance estimate of manufacturing activity incorporating “approximately 85% of the usual monthly survey replies,” with the final PMI data for the month released on August 1.

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

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Manufacturing Production Rebounded in May after a Soft April

Manufacturing production increased 0.6 percent in May, rebounding from a revised 0.1 percent decline in April, according to the Federal Reserve Board. We have seen relatively strong growth in the manufacturing sector since January’s winter-related decreases in output. Indeed, manufacturing production has risen 2.8 percent since January, with 3.6 percent growth over the past 12 months. That was the fastest year-over-year pace for the sector since October.

Capacity utilization for manufacturers also increased for the month, up from 76.7 percent in April to 77.0 percent in May. That was the highest level since March 2008, continuing a trend of reaching near pre-recessionary paces nearly five years after the economic recovery began. Still, on a year-over-year basis, manufacturing capacity has grown just 1.4 percent, which leaves room for improvement.

In May, durable goods production growth outpaced nondurable goods activity by 0.9 percent to 0.4 percent, respectively. In all, 12 of the 19 major sectors experienced output gains for the month, with most of the decliners among nondurable goods segments. The largest increases in production were in the plastics and rubber products (up 1.8 percent), wood products (up 1.7 percent), motor vehicles and parts (up 1.5 percent), petroleum and coal products (up 1.3 percent), electrical equipment and appliances (up 1.1 percent), and machinery (up 1.1 percent) sectors.

In contrast, textile and product mills (down 0.9 percent), paper (down 0.5 percent), apparel and leather products (down 0.4 percent), food, beverage and tobacco products (down 0.3 percent), primary metals (down 0.1 percent), and printing and support (down 0.1 percent) had lower production in May.

On a year-over-year basis, durable goods production jumped from 4.7 percent in April to 5.3 percent in May, and it has risen steadily since bottoming out at 3.1 percent in January. Several durable goods sectors have experienced robust growth over the past year, including motor vehicles and parts (up 7.7 percent), machinery (up 7.6 percent), furniture and related products (up 6.7 percent), and wood products (up 6.2 percent). At the same time, nondurable goods output rose 2.2 percent over the past 12 months, up from 0.3 percent in January and 2.0 percent in April. The fastest annual growth in the nondurable goods space was plastics and rubber products (up 5.9 percent).

Meanwhile, overall industrial production rose 0.6 percent in May, recovering from the 0.3 percent drop in April. In addition to the gain from manufacturing for the month, mining output also grew strongly (up 1.3 percent). Yet, utility production dropped for the fourth straight month (down 0.8 percent). Total capacity utilization increased from 78.9 percent to 79.1 percent, with year-over-year growth of 2.4 percent.

In conclusion, manufacturers began to see better production numbers in May, with decent growth over the past few months. The NAM/IndustryWeek Survey of Manufacturers also suggests that business leaders remain mostly upbeat about sales and output over the next year, which is definitely positive.

Yet, we could still do more to make this growth more broad-based, particularly extending these production gains to the nondurable goods sector. And, it is also clear that manufacturers remain somewhat cautious in their optimism, remaining particularly frustrated with the political environment. For that reason, policymakers should focus on those initiatives which will keep the economy growing moving forward, helping to fulfill the hopeful outlook seen in so many surveys, including ours.

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

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Markit: U.S. Manufacturing Output Growth Rose in May to Fastest Pace since February 2011

The Markit Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) rose from 55.4 in April to 56.2 in May. The increase in May stemmed largely from an increase in production, with the output index up from 58.2 to 59.6. That was the fastest pace for output growth since February 2011, and it suggests that manufacturers in the U.S. have rebounded from weather-related softness earlier in the year. The index for production had declined to 53.4 in January and has risen each month since.

Other data points were mixed. New orders (down from 58.9 to 58.2) and export sales (down from 51.9 to 51. 5) were both lower, but these figures also suggest relatively strong demand overall, particularly domestically. The pace of hiring was also slightly lower (down from 53.8 to 53.5). Yet, employment continues to grow modestly, with the index averaging 53.7 year-to-date in 2014, up slightly from 52.9 in 2013.

Pricing pressures have picked up a bit in May, with the index for input prices rising from 53.5 to 56.3. This was the highest level for the raw materials index since January, and it mirrors other recent data that have shown producer prices accelerating somewhat, particularly for food items.

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

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Chinese Manufacturing Sales and Output Turned Slightly Positive in May

The HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI) reported some degree of progress in May, particularly for sales demand and production. The headline PMI figure moved slightly higher, up from 48.1 in April to 49.7 in May. On the one hand, it suggests that overall manufacturing sentiment continues to contract, with PMI values below 50 for five straight months. Yet, the pace of the decline appears to be slowing, which could be a sign of stabilization for the market. Indeed, new orders (up from 47.7 to 50.2), export sales (up from 49.3 to 52.7), and output (up from 48.0 to 50.3) all turned positive for the month, which is good news. Still, hiring continued to decelerate (down from 48.6 to 47.3), and as the press release states, “downside risks to growth remain.”

Meanwhile, the Markit/JMMA Flash Japan Manufacturing PMI rose from 49.4 to 49.9, indicating that the Japanese economy has now contracted for the second straight month. Much of this stems from a tax increase that went into effect on April 1st, with the soft export market also a factor. New orders (up from 47.4 to 49.4), production (up from 46.2 to 49.2), and exports (down from 49.1 to 48.2) continued to shrink in May, even as there was some progress. Still, it is noteworthy that May’s PMI figure was nearly at the neutral rate, suggesting that there might be some stabilization occurring, much like we saw in the Chinese data.

In other news, the Markit Flash Eurozone Manufacturing PMI declined from 53.4 to 52.5. New orders (down from 53.9 to 52.9), output (down from 56.5 to 54.7), and exports (down from 53.6 to 52.8) have all decelerated somewhat in May, with the pace of production growth at its lowest level since December. Hiring (down from 51.3 to 50.8) remains positive, with small net increases for the fifth straight month.

Even with the slight easing, Europe’s PMI values for the sector have averaged modest growth with 53.2 so far in 2014, a welcome improvement from the contractionary environment pervasive during the deep two-year recession. One of the more closely watched variables is input prices, particularly with recent deflationary worries as stated by the European Central Bank. Raw material costs did continue to fall for the third straight month, but the rate of decline slowed (up from 45.2 to 48.6).

The Flash data for both France and Germany were also somewhat softer in May. Germany’s PMI for manufacturers dropped from 54.1 to 52.9. It is down from its recent peak (a 2½-year high) of 56.3 in January. At the same time, France’s manufacturing sentiment moved back into a slight contraction (down from 51.2 to 49.3), ending two months in positive territory, with activity down mostly across-the-board.

Flash data give us an advance estimate of manufacturing activity incorporating “approximately 85% of the usual monthly survey replies,” with the final PMI data for the month released in early June. This month marks the premier of preliminary data for Japan.

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

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Manufacturing Production Declined in April, Following Strong Rebounds in February and March

After strong rebounds in February and March, manufacturing production declined 0.4 percent in April, according to the Federal Reserve Board. Manufacturing output has risen 1.5 percent and 0.7 percent in February and March, respectively, following a sharp decline in January related to winter storms. Even with the decrease in April, production in the sector has risen 2.9 percent over the past 12 months, down slightly from 3.1 percent in March.

Capacity utilization also eased a bit in the manufacturing sector, down from 76.9 percent in March to 76.4 percent. This brought the utilization rate back to where it was in December. On a year-over-year basis, manufacturing capacity has grown 2.1 percent.

The underlying data by sector were mixed but lower, with 12 of the 19 major sectors experiencing reduced output for the month. Durable goods and nondurable good production both declined, down 0.3 percent and 0.4 percent, respectively.  The largest monthly declines were seen in the machinery (down 1.6 percent), petroleum and coal products (down 1.6 percent), primary metals (down 1.6 percent), furniture and related products (down 1.2 percent), and plastics and rubber products (down 1.0 percent) sectors.

In contrast, areas with increased production in April included aerospace and miscellaneous transportation (up 1.3 percent), nonmetallic mineral products (up 0.5 percent), wood products (up 0.4 percent), apparel and leather (up 0.2 percent), and motor vehicles and parts (up 0.1 percent). Looking at broader categories, production in both energy (down 1.2 percent) and high-technology industries (down 0.2 percent) were lower.

While manufacturing activity in April was slightly disappointing, it is important to note that output continues to reflect modest gains year-over-year, particularly for durable goods firms (up 4.3 percent). Nondurable goods activity has declined 0.35 percent, however, over the past 12 months. The largest year-over-year gains were in the apparel and leather (up 7.5 percent), motor vehicles and parts (up 6.8 percent), nonmetallic mineral products (up 6.0 percent), machinery (up 5.0 percent), and wood products (up 4.9 percent).

Meanwhile, overall industrial production declined 0.6 percent in April, following 0.9 percent and 1.1 percent gains in February and March. Mining activity (up 1.4 percent) increased for the second straight month, but this was offset by declines in manufacturing (see above) and utilities (down 5.3 percent). Industrial production rose 3.5 percent between April 2013 and April 2014, reflecting modest gains, but this was down from a 3.9 percent pace the month before. Capacity utilization was lower, as well, down from 79.3 percent to 78.6 percent.

In conclusion, the U.S. economy has started 2014 at a much slower pace than anticipated, particularly given the strong momentum seen at the end of 2013. While manufacturers have begun to rebound from winter-related softness earlier in the year, it remains clear that output growth has not fully recovered to the pace seen just a few months ago.

We remain hopeful for the demand and production to accelerate in the coming months, but April’s decline in activity shows just how fragile our recovery has been. Manufacturers are cautiously optimistic about increased activity this year, but there is also nervousness that such progress will be fleeting, much as it has in previous years. We can’t afford to continue the “one step forward, two steps back” trend – it is costing us the ability to truly compete in the global economy – policymakers must combat that trend with pro-growth measures that allow manufacturers to make sustained investments and grow their businesses.

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

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Manufacturing Labor Productivity Improved in the First Quarter, but Activity Weakened

The Bureau of Labor Statistics said that labor productivity in the manufacturing sector improved in the first quarter. Manufacturing labor productivity rose 3.3 percent in the first quarter, up from 1.3 percent in the fourth quarter and higher than the 2.3 percent average for 2013. Yet, the negative impact of weather can also be seen in this data, with the pace of manufacturing output growth declining from 4.7 percent to 1.8 percent. The fact that total hours decreased 1.4 percent in the first quarter was even more telling of this. As a result of weaker activity, unit labor costs eked out a 0.1 percent increase.

Breaking this data down by sector, labor productivity for durable goods manufacturers outpaced their nondurable goods peers, up 3.6 percent versus 2.5 percent, respectively. The larger impact of weather was seen in the durable goods industry, with hours falling 1.9 percent in the first quarter and output growth decelerating from 6.9 percent in the fourth quarter to 1.6 percent in the first quarter. Nondurable goods output rose 2.0 percent. Still, unit labor costs were slightly lower for durable goods businesses (down 0.1 percent), with nondurable goods unit labor costs up 0.4 percent.

Looking at longer-term trends, we continue to see one of the reasons why manufacturing in the U.S. has become more attractive in recent years. Since the end of 2009, unit labor costs for manufacturers have fallen 3.3 percent, with durable goods unit labor costs off 12.1 percent over that time frame. These figures help to keep U.S. manufacturers more competitive globally.

In the larger economy, nonfarm labor productivity declined 1.7 percent in the first quarter, following three consecutive quarters of decent growth. Output rose a paltry 0.3 percent, down from the much stronger growth rate of 3.8 percent in the fourth quarter. Therefore, unit labor costs were up 4.2 percent for the quarter. In 2013, nonfarm labor productivity rose 0.5 percent, with output up 2.2 percent and unit labor costs up 1.1 percent.

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

productivity

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China’s Manufacturing Sector Contracted for the 4th Straight Month; U.S. and Europe Strengthened

Chinese manufacturing activity contracted for the fourth straight month. Yet, the pace of the decline slowed, with the HSBC Flash Manufacturing Purchasing Managers’ Index (PMI) up from 48.0 in March to 48.3 in April. The data largely mirrored the recent deceleration seen in other economic indicators, including China’s real GDP falling from an annualized 7.7 percent in the fourth quarter of 2013 to 7.4 percent in the first quarter of 2014.

Despite the weaknesses, one could put a positive spin on the slightly better – but still contracting – levels of new orders (up from 46.9 to 47.7) and output (up from 47.3 to 48.0). On the other hand, employment (down from 49.3 to 48.6) and export sales (down from 51.4 to 49.3). Exports have now contracted in four of the past six months, which have no doubt negatively impacted overall manufacturing sentiment.

Meanwhile, the latest reports reflect renewed strengths in both Europe and the United States. While the Markit Flash U.S. Manufacturing PMI edged marginally lower (down from 55.5 to 55.4), production growth (up from 57.5 to 58.2) was at its highest level since March 2011. This was a sign that the sector has begun to move beyond the weather-related slowdowns observed earlier in the year. New orders (up from 58.1 to 58.9) and exports (up from 51.0 to 51.9) have also rebounded. Hiring eased a bit (down from 53.9 to 53.8), but still reflected modest growth.

At the same time, the Markit Flash Eurozone PMI increased from 53.0 to 53.3. This was the tenth consecutive monthly expansion on the continent for manufacturing activity. The higher figure in April was largely the result of the jump in output (up from 55.4 to 56.5), which was only barely below the three-year peak of 56.7 seen in January. Likewise, hiring also strengthened (up from 50.3 to 51.3), its highest point since September 2011.

Nonetheless, sales growth moderated slightly (down from 54.4 to 53.9), with exports unchanged (53.6). The good news was that both still reflected modest gains, and the recent gains in demand and production in Europe have helped to lift spirits, particularly given the severity of the two-year recession.

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

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Markit: Chinese Manufacturing Activity Has Contracted in Each Month So Far in 2014

The HSBC Flash China Manufacturing Purchasing Managers’ index (PMI) continued to decelerate, down from 48.5 in February to 48.1 in March. The index has contracted for three consecutive months, with March’s pace being the slowest since July. As noted in the most recent Global Manufacturing Economic Update, these data mirror the easing that we have seen in other indicators, including industrial production, fixed asset investment, and retail sales. As such, they also suggest that real GDP might fall below the 7.7 percent rate seen in the fourth quarter.

Flash data give us an advance estimate of manufacturing activity incorporating “approximately 85% of the usual monthly survey replies,” with the final PMI data for the month released on April 1. The March data reflect decelerating levels of activity for new orders (down from 48.1 to 46.9) and output (down from 49.2 to 47.3). On the positive side, export sales shifted from contraction (49.3) to a slight expansion (51.4), and employment growth declined at a slower rate (up from 46.9 to 49.3).

Hongbin Qu, HSBC’s China Chief Economist and the Co-Head of Asian Economic Research, said, “Weakness is broadly-based with domestic demand softening further. We expect Beijing to launch a series of policy measures to stabilize growth. Likely options include lowering entry barriers for private investment, targeted spending on subways, air-cleaning and public housing, and guiding lending rates lower.”

Meanwhile, Eurozone manufacturers have seen expanding levels of activity for nine straight months, with continued modest growth in March. Nonetheless, the Markit Flash Eurozone Manufacturing PMI edged slightly lower, down from 53.2 in February to 53.0 in March. The underlying data were mixed. Sales growth picked up marginally from 54.1 to 54.4, but production (down from 55.5 to 55.4), exports (down from 54.7 to 53.6), and hiring (down from 50.4 to 50.3) moved slightly lower. Still, growth in output and new orders remained relatively healthy, even with some easing in many of the key figures.

One of the lagging economies in Europe has been France, which had contracting levels of manufacturing activity in all but 2 of the past 27 months. The good news was that French manufacturing sentiment turned positive once again in March, with the Markit Flash France Manufacturing PMI up from 49.7 to 51.9. Activity was up across the board, and growth in new orders (up from 46.6 to 53.3) were at their highest level since June 2011. Elsewhere in Europe, German manufacturing activity slowed a bit, down from 54.8 to 53.8. Despite the deceleration, output (down from 57.6 to 57.0) and sales (down from 57.2 to 55.6) growth remained strong.

Likewise, the Markit Flash U.S. Manufacturing PMI moved lower for the month, down from 57.1 to 55.5. February’s figure reflected the strong rebound from January’s weather-related softness due to severe winter storms. Much like the European data, the larger story is the continued modest growth for manufacturers in the U.S. market. For instance, new orders (down from 58.8 to 58.0) continued to grow strongly even with a little easing for the month, and production (up from 57.2 to 57.5) and exports (up from 50.9 to 51.0) had a slightly faster pace of growth.

Employment growth (down from 54.0 to 53.9) was essentially unchanged for the month despite edging a bit lower for the month. After hiring nearly stalled last June, manufacturers have continued to add to their workforces, albeit at a modest pace.

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

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