But the American sweater gets dirty. Germany's manufacturing data "gives unpleasant reading."
Much of the glowing press coverage today focused on the emergence of manufacturing data coming out of China, as reported by Caixin Manufacturing PMI (Purchasing Managers Index) and the official manufacturing PMI, both of which returned to (weak) growth, after being in summary mode since November.
We come to them in an instant. But what got less coverage were the other PMIs that were also released today, including Germany, the US and Japan. And what happens in Germany and Japan puts China's spread in another light – with the US being the cleanest dirty shirt that is now getting dirty, so to speak.
Germany: March "makes unpleasant reading"
For All these PMI actions, a value below 50 means "contraction" and a value over 50 means "expansion". IHS Markit / BME Manufacturing PMI for Germany fell to 44.1
The report highlighted "a sharp and accelerated decline in new orders", with total order books and export orders falling at the fastest rate since April 2009. The reasons spread across the spectrum of "uncertainty about Brexit and trading tensions," weak automotive industry and generally softer global demand ".
Working life declined as "the fastest part since mid-2009", as manufacturers recovered
Employment fell over the sector for the first time in three years: "The decline was only marginal, yet it was in contrast to fixed employment levels below the latest months."
This manufacturing data for March "makes it uncomfortable to read", the report reported. "Both total orders and export sales are now falling at prices not seen since the global financial crisis."
PMI measures are based on investigations by industry leaders whose names and companies are not disclosed. These "panelists" are encouraged to rate different aspects of their business – new orders, new export orders, employment, lag, inventory, supply chain delays, deployment costs, etc. – if each of these aspects increases or decreases. Their responses form sub-indices, which are then combined in the overall headline index (the basis of these charts). PMIs are a perception of business leaders about how their companies are affected by economic development.
Note: I put all the PMI numbers below in the same index scale as Germany, from 44 to 64, to allow for easier comparisons of the size of the changes taking place in each country.
Japan: manufacturing sector "in poor shape"
"Japan's manufacturing economy ended the first quarter in poor shape with weaker demand pulling production volumes deeper into contraction," An economic backdrop for manufacturers "is still tough," according to Nikkei Japan PMI . At 49.2 in March – slightly up from February, which has been the lowest for 32 months, the index remains in a summary position, "signaling a further slowdown." It rounded off the difficult quarterly trend in Japan's manufacturing sector since Q2 2016 "(I put this chart on the same index scale as Germany's, from 44 to 64):
New domestic orders and new export orders fell further. The export orders were due to "weaker foreign sales to Chinese and Taiwanese customers." Given the downturn in orders, production volumes across the Japanese manufacturing sector came in for the third straight month – and even though these cuts were "only moderate," they were "the sharpest since May 2016. "
The outlook" remains undermining in March ", weakened by" global trade fears, the effects of incoming sales tax and weaker growth in China. " China: Hopes are targeting the government.
Caixin China Manufacturing PMI ticked up in expansion license (50.8) in March for the first time since November, with companies like signals "somewhat faster increases in production and overall new work" and employment increased for the first time since October 2013. Production rose for the second month in a row, "supported by a stronger, albeit still relatively subdued, increase in total new work." But Purchase of Activities Continuously (19659003)
And the report commented on what really played a role (emphasis placed): "Overall with a more relaxed funding environment government efforts to protect the private sector and positive progress in trade talks between China and the United States, the situation in the manufacturing sector recovered in March. "
The official China Manufacturing PMI, released by China's National Bureau of Statistics, also squeaked in expansion states (50.5) after being in summary mode since November. "The recovery in manufacturing expansion came when the factories resumed production after the Spring Festival," reported the sate-owned CGTN (I also post this chart on the same index scale as Germany's):
Some sub-indices were positive, including production (52 , 7 from 49.5), new orders (51.6) and purchasing volume (51.2 from 48.3). And optimism became even tighter as the "expected production and business index" increased to 56.8.
However, other indices were quite deep in the summary, including new export orders (47.1), in order intake (46.4), import index (48.7) and employment index (47.6).
Then, the division was by size: the large-business PMI, at 51.1, was still in expansion. However, the index for small and medium-sized enterprises remained in the contraction, respectively, 49.3 and 49.9, respectively.
United States: Cleanest Dirty Shirt
IHS Markit US Manufacturing PMI fell to 52.4 in March, the lowest reading since June 2017, and "especially softer than the trend seen for 2018" (chart on the same index scale as Germany):
Production expanded to a "marginal rate that was the weakest since June 2016" based on "softer underlying customer needs."
New order growth "has fallen close to the downturns seen in the 2016 slowdown." Export orders only increased marginally ", with companies noting that global trade tensions and the ongoing effects of tariffs had dampened foreign customer demand." The backlog of work slowed somewhat in the contraction. But the employment index rose with a fixed interest rate. "
" A further deterioration of manufacturing PMI suggests that the manufacturing sector is acting as an increasing feature of the US economy, "the report reported." Things can get worse before they get better, because the forward-looking indicators are worrying. "
So in this snapshot of the four largest manufacturing plants in the world, German manufacturers are as gloomy as under the euro debt crisis and very nervous Japanese manufacturers are worried by the ongoing slowdown; Chinese manufacturers expect the government to "give a more relaxed financing environment" and "bourge it private sector "and US manufacturers are in a weak growth position – the slowest growth since 2016 – and for now is the cleanest dirty shirt that gets dirty.
But the US service sector, which is significantly larger than the manufacturing sector, is at present overall economic growth declined because There can be no recession but a recovery in services. Read … Finance & Insurance Find It Outside the Ballpark, No Downfall in the Huge Service Sector
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