Recent Reports Suggest Manufacturing Growth in US and China
“As a broad principle, the rot appears to have stopped” for global manufacturing, said Ian Shepherdson, chief economist at Pantheon Macroeconomics, but “the picture is varied.”
2019's final reading of data company IHS Markit’s U.S. manufacturing purchasing managers index for December was 52.4, down slightly from 52.6 in November. (A level above 50 points to growth in business activity).
“The U.S. manufacturing sector continued to recover from the soft patch seen in the summer,” said Chris Williamson, chief business economist at IHS Markit, with December’s expansion due to greater client demand and a rise in new order volumes. Still, he added that the expansion “remains well below that seen this time last year, suggesting producers are starting 2020 on a softer footing than they had enjoyed heading into 2019.”
Surveys of businesses in December registered signs of stabilization across a number of Asian economies, with production picking up in South Korea, the Philippines, Thailand, Malaysia and India, while continuing to increase in China.
IHS Markit said its purchasing managers index for China fell to 51.5 in December from 51.8 in November, pointing to an expansion in activity. Signs of a revival in the world’s second-largest economy would help other parts of Asia.
“The strong survey data do suggest growth in China is holding up better than expected, providing some hope for export-focused economies in the rest of the region,” Capital Economics analyst Gareth Leather wrote in a note to clients.
However, there were few signs of an end to Europe’s industrial slump, as IHS Markit’s purchasing managers index for Germany, the continent’s exporting powerhouse, fell to 43.7 from 44.1 in the final month of the year. Italy, Spain and the U.K. also recorded sharper declines in activity, while the French expansion slowed. A pickup in European growth isn’t expected until 2021.
In the U.K., manufacturing output declined at the sharpest pace in more than seven years.
“Though the result of the general election will bring some clarity to businesses, it still feels like a long road ahead for manufacturing to recover its losses from this year and there will still be some obstacles to overcome in 2020,” said Duncan Brock, group director at the Chartered Institute of Procurement & Supply, whose members contribute to the survey of purchasing managers.