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Posts tagged 'Manufacturing'
Two recent notes emphasise that the impressive recent ISM manufacturing readings in the US are probably as much about expectations of future performance as about what has already happened.
Aichi Amemiya of Nomura notes that historical divergences between the ISM and the “hard data” have coincided with climbs in the equity market, suggesting that improved sentiment about the future is the common variable in both. Amemiya shows this by constructing a competing “hard-data based ISM manufacturing index” of five components that roughly mirror the five comprising the ISM. Read more
Compare, contrast, click to enlarge, etc — charts via Capital Economics:
The consolidated global picture: Read more
Oped pages in recent months have been regular hosts to pieces extolling some of the unsung benefits of the US shale-gas revolution. Some of these have gone so far as to proclaim that shale gas is, or will be, a significant benefit for the country’s entire economy.
Lately, though, the narrative is beginning to sound hollow. Read more
November marked the first time in over a year that both the official China manufacturing PMIs and the HSBC/Markit Economics PMIs were above 50.
And they are both nearly matching! Check it out:
It’s a data-heavy day today, with a slew of PMIs coming out. The US posted the strongest reading in six months with 52.8, which was up from 51.0 in October, suggesting manufacturing is managing moderate expansion.
There was generally solid data from China as well and no very nasty surprises in Europe. Elsewhere, Brazil saw manufacturing activity grow at the fastest rate in nearly two years with a reading of 52.2, up from 50.2 in October. Read more
Chart from Michael Saunders at Citi (click to enlarge):
What that shows is a pretty dramatic fall in Read more
The official PMI is 50.2, back in positive territory. Yay for China’s manufacturers, right?
Well, sort of, given how mixed the picture is.
Below is a breakdown of components in the official PMI survey over the past three months, via Nomura:
The preliminary HSBC/Markit China manufacturing PMI for October was 49.1 — the best result in three months and a decent jump from September‘s final reading of 47.9. Growth is still below trend, but is the relative improvement a sign that monetary easing is having an effect and/or stimulus is taking place? Read more
China’s official manufacturing PMI figure was reported at 49.8 for September, an increase from 49.2 in August. Meanwhile, on Saturday the HSBC/Markit Economics PMI was 47.9, confirming the 11th month of contraction — the longest in the survey’s history.
Some China economists have welcomed the official PMI coming within a whisker of 50, but we don’t see a lot to be excited about — it seems indicate little, apart from support for a “new normal” in Chinese growth. The components of the main figure all improved, including the important “new orders” and “new export orders” numbers. However, employment fell slightly to 48.9 from 49.1. Read more
CreditSights has updated its sector-specific chart to reflect this morning’s payrolls report, and you can see that construction and manufacturing employment continue to be well below their pre-recession levels, while education & health are well above and kept climbing in August. Read more
On the face of it, the July China PMIs are confusing. The HSBC final PMI for July was 49.3, a significant increase on its June reading of 48.2. The official Chinese PMI of 50.1 was down a little from June’s 50.2.
So.. one says that manufacturing growth is decelerating more slowly than before; the other says that manufacturing growth is accelerating more slowly than before. Read more
The magnitude of the decline in this morning’s US ISM reading was surprising, though the decline itself wasn’t.
And although there was hardly a silver lining in the report itself other than the employment index — see Joe’s two posts this morning and the reliably excellent Counterparties roundup for more — history suggests at least one reason not to panic too much over it (for the US — everyone else should consider panicking). Not yet, at least. Read more
A chart and table via CreditSights, click to enlarge:
The latest UK manufacturing purchasing manager’s index since the economy went back into recession was released this morning. Given the PMI’s leading indicator status, April’s reading is bound to be closely watched and analysed.
The Markit/CIPS PMI report, as always, comes written in economist-speak, which we will attempt to translate for you. Read more
The US manufacturing PMI released by the Institute of Supply Management (ISM) on Monday beat expectations, coming in at 53.4. But that’s not what we really want to talk about here. Instead, we want to ask the question that the team at Bank of America Merrill Lynch asked themselves in an impressive 73-chart, 43-page report last week. Namely: is US manufacturing in the early stages of a renaissance?
There is a popular image of the sector as being in perpetual decline due to offshoring. However, at least some of the alleged decline had more to do with other sectors growing and thus decreasing manufacturing’s share of GDP as a percentage. Read more
Panasonic has forecast it will lose $10bn in the financial year ending in March, its largest-ever loss, reports Bloomberg. A strong yen and Thai floods have pummelled the world’s biggest maker of plasma TVs, leading to production cuts and good-will write-downs on past investments, the FT says. Sony and Sharp have also forecast heavy losses in the last week, with Panasonic’s latest warning taking the total for all three Japanese manufacturers to $17bn, according to Reuters.
The Bank of Japan’s latest Tankan survey showed sentiment among large Japanese manufacturers has turned negative, the FT says, highlighting doubts about the prospects for the national economy’s recovery from its 2008-2009 slump and the March earthquake and tsunami. The much-watched quarterly survey found that big manufacturers expected conditions to worsen further in the first quarter of 2012. The December Tankan’s headline index, which compares the number of large manufacturers reporting positive conditions with those reporting negative views, fell to -4 from the +2 reported for September. The forecast for the March 2012 survey was -5. The result is likely to fuel calls for the government and central bank to do more to curb the yen’s rise through intervention and more aggressive monetary policy.
Chinese manufacturing activity has contracted for the first time in almost three years, adding to fears about the health of the global economy, the FT reports. The decline comes a day after the US Federal Reserve led a co-ordinated move to ease global liquidity concerns – particularly in Europe – and the Chinese central bank loosened monetary policy. Chinese government data released on Thursday showed that the official purchasing managers’ index fell to 49 in November from 50.4 in October. The worse than expected fall marked the first decline since February 2009. A reading of less than 50 means the manufacturing sector has contracted. In a surprise move that was clearly timed to offset the negative impact of the PMI number, China’s central bank on Wednesday kicked off a new round of monetary easing by announcing a cut in the reserve ratio for banks for the first time in three years.
German bond auctions failing, IMF non-announcements driving market sentiment, Spain paying through the nose to fund itself, credit spreads blowing out, Dexia dragging down triple-A France, eurobonds getting vetoed again, bank runs in Latvia, and then flash estimates of November’s Purchasing Managers Indices have to come along and kick us when we’re down. And just before Thanksgiving too.
The Markit Flash Eurozone PMI Composite Output Index, based on around 85% of usual monthly replies, rose from 46.5 in October to 47.2 in November. Although signalling a slight weakening in the rate of contraction, the latest reading signalled a downturn in private sector business activity for the third successive month.
Rising Chinese labour costs are changing the economics of global manufacturing and could contribute to the creation of 3m jobs in the US by 2020, according to a study being released on Friday, the FT reports. The Boston Consulting Group analysis says the new jobs will be generated by a “re-shoring” of manufacturing activity lost to China over the past decade. “Re-shoring is part of a broad trend that will emerge as … production gradually swings back to the US,” Hal Sirkin, a senior partner at the consultancy, told the Financial Times. The Boston Consulting Group estimates that the trend could cut the US’s merchandise trade deficit with the rest of the world, excluding oil, from $360bn in 2010 to about $260bn by the end of the decade. The shift would also reduce its soaring deficit with China, which reached $273bn in 2010 and has triggered an intense political controversy over China’s exchange rate policies.
US car sales rose strongly in September, with gloom over economic prospects offset by consumers’ need to replace old vehicles, easier credit conditions and an improved supply of Japanese vehicles, the FT reports . According to preliminary data, light-vehicle sales climbed to slightly more than 13m units at a seasonally adjusted annual rate, from 12.1m in August and 11.8m in September 2010. General Motors reported a 20 per cent jump in sales from a year earlier, and Ford Motor a 9 per cent increase. Chrysler posted a 27 per cent gain, reaching its highest September sales volumes in four years. Demand for sport-utility vehicles and pick-up trucks was especially robust. Meanwhile a 51.6 per cent reading on the US ISM manufacturing index, also published on Monday, helped dampen fears of a double-dip recession in the US, reports the FT separately. However global manufacturing data in aggregate suggests the sector is in its worst shape since mid 2009.
Manufacturing output plummeted across Asia last month in response to Europe’s slowing economy, according to PMI data, Reuters says. Indian factories has their worst month since November 2008, according to the HSBC Markit Indian Manufacturing PMI, which fell to 50.4 from 52.6. Taiwan’s PMI contracted for the fourth month in a row while Australia’s manufacturing industries deepened further into contraction territory, reports the WSJ. Tumbling new orders from Europe accounted for large parts of the slowdown, setting a poor tone for European and US PMI figures to be released later on Monday.
Japan’s quarterly Tankan index of sentiment at large manufacturers rose to 2 in September from minus 9 in June, Bloomberg reports. The reading remains below the March quarter figure of 6, but a positive number means optimists outnumber pessimists. Japanese companies have been restoring operations after the quake and tsunami disrupted supply chains, with Toyota boosting production for the first time in a year in August and hiring temporary workers. The WSJ says the survey results could be good news for the Bank of Japan, which meets this week and has been under pressure to take further action on exchange rates as the yen continues to hover near a record high, creating uncertainty for the export-dependent country.
Markit Eurozone flash PMIs released this morning showed worrying signs about the strength of core country Germany’s manufacturing sector. With a preliminary index level of 50.0 for September, down from 50.9 in August, the sector is a hairbreadth away from decline, reports the WSJ. The German service sector is proving slightly more resilient, but it also experienced a deterioration in its reading, moving from 51.1 in August to a preliminary 50.3 for September.