The J.P. Morgan Global Manufacturing PMI picked up from 53.6 in January to 53.9 in February, the fastest pace in three years. Overall, manufacturers remain very upbeat in their outlook for production over the next six months. The index for future output rose to its highest level since May 2014. Supply chain disruptions helped push input prices higher, with raw material costs jumping at the swiftest rate since April 2011.
In February, eight of the top nine markets for U.S.-manufactured goods had expanding manufacturing sectors, up from seven in January. Many markets experienced notable milestones in the PMI data, including Germany (best since January 2018), Japan (best since December 2018), the Netherlands (best since July 2018) and South Korea (best since April 2010). At the other extreme, Mexico contracted at the slowest pace of decline in 11 months.
The Chinese economy grew 6.5% year-over-year in the fourth quarter, the fastest rate in two years. Industrial production increased 7.3% year-over-year in December, the strongest pace since March 2019. New production data will be released early next week.
Despite strength in manufacturing, several markets noted service-sector weaknesses due to COVID-19 restrictions. Retail sales were lower in the latest figures, for instance, in Canada, the Eurozone, Japan and the United Kingdom . Experts hope that increased vaccinations will spark rebounding activity in the months ahead.
Since Jan. 6, the U.S. dollar has risen 2.6% against a broad-based index of currencies for goods and services, according to the Federal Reserve. The recent appreciation in the dollar coincides with rising interest rates, making the currency more attractive in foreign exchange markets.
The U.S. trade deficit rose from $66.97 billion in December to $68.21 billion in January. Goods imports increased to a new record pace, more than outpacing the rise in goods exports, which was the best reading since February 2020. U.S.-manufactured goods exports totaled $81.66 billion in January, using non-seasonally adjusted data, dropping 5.3% from $86.25 billion in January 2020.
Manufacturers are working robustly with the Biden administration and Congress to open markets, ensure trade certainty and address challenges overseas, taking actions that include the following:
Continuing to monitor the U.S.–China security, trade and economic relationship, and stressing the need for a comprehensive and strategic U.S. approach on China
Calling on the Biden administration to expand U.S. leadership and work to reform and strengthen the World Health Organization
Considering the impact on manufacturers of a U.S. rule on the Information and Communications Technology and Services supply chain
Leading industry advocacy in support of congressional passage of a comprehensive Miscellaneous Tariff Bill
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