1/6/20: 3 months of COVID19 impact: BRIC Manufacturing PMIs

BRIC Manufacturing PMIs are out for May, showing some marginal improvements in the sector. However, of all four economies, China is the only one that is currently posting activity reading within the statistical range of zero--to-positive growth. Brazil, Russia and India remain deeply underwater.

Please note, these are quarterly PMIs, not monthly, based on GDP-weighted shares of manufacturing sectors and monthly PMI data points. 

3/5/19: Global and BRIC Manufacturing PMIs signal ongoing growth declines

The latest data, released this week by Markit under their PMI headings, shows that manufacturing sector global slowdown has entered into its 6th consecutive quarter in the first month of 2Q 2019. In line with this momentum, BRIC economies overall, with exception (for now) of Russia and China have also posted slower growth in April compared to 1Q 2019 average:

Russia posted slightly more upbeat growth in April at 51.8 compared to 1Q 2019 average growth of 51.3. China has barely bounced back into growth in April 2019 compared to 1Q 2019 reading of 49.7. Brazil slowdown was marked, with PMI for Manufacturing down from 53.0 in 1Q 2019 to 51.5 in April, while India suffered an even more significant fall-off in activity, with Manufacturing PMI falling from 1Q 2019 average of 53.6 to April reading of 51.8.

Global Manufacturing sector PMI averaged 50.7 in 1Q 2019, and in April it fell to 50.3, statistically implying zero growth in the sector. One has to go back to 3Q 2013 to see a reading at or below April 2019 levels. 

4/1/16: Global manufacturing weighted down by BRICs in December

According to Markit, “The global manufacturing sector ended 2015 on a disappointing note, with the rates of expansion in production and new orders both slowing in December. At 50.9, down from 51.2 in November, the J.P.Morgan Global Manufacturing PMI …fell to a three-month low. The average PMI reading over 2015 as a whole was below those registered in both of the prior two years.”

The new sub-sector data “covering consumer, intermediate and investment goods producers…signalled that the slowdown highlighted by the headline Global Manufacturing PMI during
December mainly reflected weaker expansion at investment goods producers and a further contraction in the intermediate goods sector. In contrast, growth accelerated slightly at consumer goods producers.”

Much of the deterioration is, apparently down to emerging markets weaknesses. “The end of 2015 saw the downturn in emerging market manufacturing continue, with PMI indices for China,
India, Brazil, Russia, Indonesia and Malaysia all in sub-50.0 contraction territory. Although the expansion in developed nations continued, growth slowed (on average) to an eight-month low.”

Note: I covered Manufacturing PMIs for BRIC economies in an earlier post here: http://trueeconomics.blogspot.ie/2016/01/4116-bric-manufacturing-pmis-december.html

You can see the ‘weighting’ effect in the chart here based on quarterly data:

And a summary table for Global Manufacturing PMI from Markit here:

Per Markit:

• Growth rates fell to a 38-month low in the US
• Growth eased to three-month low in the UK, 
• Growth held steady in Japan, and 
• Growth “accelerated to a 20-month high in the euro area.” 

Net outrun: global manufacturing has ended 2015 an inch closer to zero growth / stagnation point and certainly nowhere near the levels of growth consistent with amplification in global economic growth rates forward.

4/8/15: Global Manufacturing PMI Signals Faltering Growth in July

Global Manufacturing PMI was unchanged in July compared to June at 51.0, signalling weak growth and stalled growth momentum. Overall, activity is now at "its joint-weakest reading during the past two years".

Per Markit: "Underpinning the increase in output was further growth in new order inflows. However, the pace of improvement in new business slowed as new export orders declined for the second time in the past three months. New export business decreased in China, Germany, France, the UK, Taiwan, South Korea, Greece, Turkey, Indonesia, Vietnam, Russia and Brazil, and was little-changed in the US and Malaysia."

You can read more on this in my coverage of BRIC Manufacturing PMIs here: http://trueeconomics.blogspot.ie/2015/08/4815-bric-manufacturing-pmis-july-2015.html

17/12/2012: Don't write manufacturing off - part 2

In the previous post I reproduced the summary chart from McKinsey research paper on the future of manufacturing (linked in the post). Here is a more detailed version of the same:

Again, few points worth raising in Ireland's development context: given our openness to trade and limited domestic markets, as well as strong access to global labour markets, we should be prioritizing development that focuses on:

1. Trade intensity (with intensities at around and above 50%)
2. Value intensity (with intensities at around and above 30%)
3. R&D intensity (with intensities at least in double digits)
4. Labor intensity (with intensities at least in double digits)

From the above 4 criteria, equally weighted, our priorities (scores in brackets reflect sum of values across the above 4 criteria), we have:

• Computers and office machinery (155)
• Semiconductors and electronics (132)
• Medical, precision, and optical (123)
• Furniture, jewelry, toys, other (105)
• Other transport equipment (94)
• Textiles, apparel, leather (92)
• Machinery, equipment, appliances (82)
• Chemical (80)
• Motor vehicles and parts (77)
• Electrical Machinery (76)

Interesting view?

17/12/2012: Don't write manufacturing off

Here is an amazing (yep, amazing) report from McKinsey on the future of Manufacturing: http://www.mckinsey.com/insights/mgi/research/productivity_competitiveness_and_growth/the_future_of_manufacturing

And here is a really fascinating eye-opening chart from it:

What are the interesting bits in the above?

1. The US retained its position as number 1 manufacturing source in the world (note - with recent emergence of on-shoring trend for US manufacturing, this is likely to stay)
2. China moved - predictably - quite fast in the league table
3. India's performance has been relatively weaker than that of China - not surprising 
4. Russia - in 2000 only 21st in the world is now 11th
5. Brazil moved from 15th in 2000 to 6th
6. Indonesia moved from 20th in 2000 to 13th
7. Germany dropped from the 2nd in 1980 to the 4th
8. Italy rose from the 6th in 1980 to the 5th
9. France dropped from the 5th to the 8th
10. In 1980 and 1990, EU had 5 countries in the top 10, in 2000 - 4 countries and the same number in 2010 - a rate of relative decline
11. Big loser is Canada, rising from 10th in 1980 to 9th in 2000 and falling to 15th in 2010.

Here is another revealing chart, mapping 5 broad categories of manufacturing sectors based on specific inputs intensities:

Let's give it a thought. Ireland is a location most suited for R&D intensive and labour (skilled) intensive sectors, as we have neither sufficient capital, nor access to cheap energy (sorry, the renewables bugs - these are not cheap and not abundant). We also want to aim for high trade intensity and high value density. Which means priority sectors for us should be:

• Motor vehicles, trailers, parts
• Other transport equipment
• Electrical machinery
• Machinery, equipment, appliances

Tier 2 priorities (mostly driven by imported capital due to their high capital intensities) should be:

• Chemicals
• Computers and office machinery
• Semiconductors and electronics
• Medical, precision, and optical

Interestingly, and rather counter contrary to the perceived effects of the web-based economy, R&D intensive areas of the economy remain manufacturing:

These are just some of the fascinating insights. I will try blogging on the report some more in later posts.