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But the shirt of the United States becomes dirtier. German manufacturing data "makes reading uncomfortable".
Most news articles have been devoted to the rise in manufacturing data from China, as indicated by the Caixin Manufacturing PMI (Purchasing Managers' Index) and the official manufacturing PMI, both of which are revenue growth mode (low), having been in contraction mode since November.
We will get there in a moment. But what has had less coverage are the other published PMIs, including those from Germany, the United States and Japan. And what's happening in Germany and Japan has shed new light on China's bearings – the United States remains the cleanest and dirtiest shirt that gets dirty, so to speak.
Germany: March "makes reading uncomfortable"
For all these PMI measurements, a value less than 50 means "contraction" and a value greater than 50 means "expansion". Germany's IHS Markit / BME Manufacturing plunged to 44.1 in March, down from 47.6 in February, its lowest level since July 2012 near the bottom of the euro debt crisis.
The report highlighted "a rapid and accelerated decline in the number of new orders", with the total number of order books and export orders falling at the fastest pace since April 2009. were multiple: "the uncertainty surrounding Brexit and trade tensions, a fragile automotive sector, overall demand generally lower.
Late work in manufacturing fell as "the fastest rate since mid-2009" as manufacturers increased their backlog to keep their mills active.
Employment declined in the sector for the first time in three years: "The decline was only marginal, but it nevertheless contrasted with the strong job creation rates recorded over the past three years. previous months. "
This manufacturing data for March "makes reading uncomfortable," the report said. "Total new orders and export sales are now falling at rates never seen since the global financial crisis."
PMI measures are based on surveys of industry leaders whose names and companies are not disclosed. These "panelists" are asked to evaluate various aspects of their activities – new orders, new export orders, employment, backlog, inventories, supply chain delays, input costs, and so on. – depending on the increase or decrease of each of these aspects. Their responses form sub-indices, which are then combined into the overall global index (base of these graphs). PMIs provide executives with an overview of the impact of economic change on their business.
Note: I clbadify all the PMIs below in the same index scale as Germany's, from 44 to 64, to allow easier comparisons of the magnitude of the changes occurring in each country.
Japan: the manufacturing sector "in bad shape"
"The Japanese manufacturing economy ended the first quarter in poor condition, lower demand leading to further contraction of production volumes," and the economic context for manufacturers "remains extremely difficult," according to the Nikkei Japan PMI. At 49.2 in March – up slightly from February, which was the lowest in 32 months, the index remains in contraction mode, "signaling a further slowdown." It "closed the worst quarterly performance of the manufacturing sector in Japan since the second quarter of 2016" (I put this chart on the same scale of index as that of Germany, from 44 to 64):
New domestic orders and new export orders have further declined. The decline in export orders was attributed to "weak sales abroad to Chinese and Taiwanese customers". Given the drop in orders, production volumes were "reduced in the Japanese manufacturing sector for the third consecutive month" – and these reductions were "only moderate". , "They were" the strongest since May 2016. "
The outlook "remained disappointing in March," while "fears of global trade, the impact of rising sales and growth tax in China were lower."
China: hopes focus on the government.
The Caixin China Manufacturing PMI moved into expansion mode (50.8) in March for the first time since November, with companies reporting "a slightly faster increase in production and new jobs", and employment has progressed for the first time since October 2013. Production rose for the second month in a row, "supported by a stronger, albeit still moderate, increase in the total number of new jobs", but buying activities continued to grow. shrink (I've also placed this chart on the same scale of index as that of Germany):
And the report commented on what really mattered (emphasis added): "Overall, with a more relaxed financing environment, government efforts to bail out the private sector and progress in Sino-US trade negotiations, the situation in the manufacturing sector picked up in March. "
The official Chinese manufacturing PMI, published by the National Bureau of Statistics of China, also rose (50.5%) after having been in contraction mode since November. "The recovery of the manufacturing industry took place when factories resumed production after the Spring Festival," said the CGTN, a state-owned company (I also put this graph on the same index scale as that of Germany):
Some sub-indices became positive, including production (52.7 vs. 49.5), new orders (51.6) and volume of purchases (51.2 vs. 48.3). And the optimism became even greater while the "expected index of production and activities" reached 56.8.
However, other indices remained relatively lagging, including new export orders (47.1), hand-held orders (46.4), the import index (48.0), 7) and the employment index (47.6).
Next is the division by size: the PMI index of large companies, at 51.1, was still in the mode of expansion. However, the index for small and medium-sized enterprises remained in contraction at 49.3 and 49.9 respectively.
United States: Cleanest dirty shirt
The US manufacturing PMI IHS Markit fell to 52.4 in March, its lowest level since June 2017 and "significantly less marked than the trend observed for 2018" (graph of the same scale of index as that of Germany) :
Production grew at a "marginal pace, the lowest since June 2016", based on "lower underlying customer demand".
The growth of new orders "was close to the lows observed during the slowdown in 2016". Export orders increased only marginally, "companies having found that global trade tensions and the continued impact of tariffs had dampened demand from foreign customers" dipped slightly into contraction. But the employment index "has grown at a steady pace".
"A further deterioration of the manufacturing PMI suggests that the factory sector is weighing more and more heavily on the US economy," the report says. And "things could get worse before you improve, because forward-looking indicators are a source of concern."
Thus, in this snapshot of the four largest manufacturing powers of the world, German manufacturers are as dark as during the euro debt crisis and very nervous; Japanese manufacturers are worried about the current slowdown; Chinese manufacturers rely on the government to provide "a more relaxed financial environment" and "bail out the private sector"; and US manufacturers are in a weakened growth mode – the slowest growth since 2016 – and for now, the cleanest and dirtiest shirt ever.
But the American service sector, which far exceeds the manufacturing sector, is still keeping the overall economic growth afloat, because there can be no recession without a decline in services. Read … Finance and insurance stand out, no slowdown in the service sector
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