Metals & Manufacturing Outlook December 2016


metals & Manufacturing Outlook Newsletter

Presented by All Metals & Forge Group, the MetalsWatch! newsletter was first published in print in 1988 for All Metals & Forge Group. Its primary focus was to be informative to the metalworking industries in the United States. Its original circulation was 2500 organizations. In 1994 we converted to electronic version only, therefore our first archived edition is dated Dec 1994 . Previous printed issues are not available for archiving. Today, Metals & Manufacturing Outlook™ (formerly MetalsWatch!) has a global circulation of 60,000 subscribers at 50,000 companies from a very diverse group of industries, including Aerospace, Defense, Oil, Chemical, Automotive, Medical, Electronics, Heavy Industry, Shipbuilding, amongst many others. Feel free to read the most current issue below, or Click here to view the back issues in our Library at the bottom of the page. To Subscribe to Metals & Manufacturing Outlook™ and receive future issues, please enter your e-mail address and click on Submit below.


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Publisher’s Statement

As we all make a collective sigh, some in relief, some in resignation, the good news is that the daily noise of the election distraction is over, although some pollsters are already weighing the public’s interest in potential candidates for 2020. That aside, it’s time to get back to business. Manufacturing has shown some signs of strengthening in the fourth quarter as we head into 2017, even though capital expenditures remain very weak for the sector. Machine tool orders for August, September and October were up and it is an important indicator for future production although reporting lags by a full 45 days. ewer countries are in recession territory and Brazil may be at or nearing their bottom. Brexit is the ho-hum we expected; albeit, no one really knows when it will play out or whether other countries will follow suit. Interestingly, there is more noise in Scotland about pulling out of the UK and rejoining the EU than there is in another EU country exiting the EU. Overall, the U.S. appears poised for GDP growth in the low 2’s according to most experts and analysts with an occasional loose hare suggesting some-thing above 3, which would include our President-elect. According to the charts in, U.S. exports have tripled since 2002 in spite of the Great Recession of 2008 and the strong dollar since late 2014. As other country economies recover, their currency should strengthen against the dollar, stimulating more trade – unless – the President-elect slaps on tariffs, kills the TPP, cripples NAFTA and believes that isolationism and protectionism mixed with trickle-down economics will boost U.S. exports. Doesn’t exactly sound like a recipe for success, does it? Employment in manufacturing continues to be – odd. The industry shows somewhere near 300,000 open jobs without a headlong rush in hiring. Across the country we have heard that the absence of high-skilled workers, or those familiar with the digital machine world, is hampering hiring, despite more than 3 million teens graduating high school each year and STEM being part of the curriculum since 1985 with more and more refining emphasis on it each year since. By many measures, STEM is not turning out the skill set employers need and the knowledge gained during a four-year degree is two years old when new college grad hires take their first cubicle seat. Many were looking to the federal government to help – from any Department: Education, Labor, Commerce – but nothing of any significance has transpired over the last 8 or 12 years. “No Child Left Behind” left a mess in its wake, and Common Core is about as reliable as common sense. The answer to the skills gap may be at the state level, but even they move at a slow pace with limited budgets compromised by existing debt. The actual answer lies within each business itself, and many of the associations that serve them. While the risk is that a skilled-up employee may jump ship to another employer, it is more likely they will stay and apply their new skills if the cerebral environment and practical application is dynamic. Having spoken with more than a handful of companies about this issue, it becomes more and more apparent that the skills gap will be closed within the manufacturers themselves, and not by some government program whether state or federal. It is a retooling cost that manufacturers will have to pay as they transition from 20th Century production lines into 21st Century manufacturing from concept to consumer and back again. And don’t discount the impact of robotics and automation. If people are unwilling to enter the industry, the industry will still move forward; if people push their expense of wages and benefits and more paid leave, they may imperil their own positions in the future.

Best Regards,

Lewis A. Weiss Publisher




by Royce Lowe

metals economyThe month saw an election result that was a surprise, to say the least. Donald Trump, on the back of many lies, threats and promises to make America great again, will hold the reigns for a minimum of four years.

We will say goodbye to Obamacare and may see the flood gates open on coal again. The Paris climate-rescue may be in jeopardy. Tariffs might be levied against goods made anywhere but in the fifty states. Trade agreements might be torn up and the U.S. might decide not to help its allies in NATO. China will be ‘confronted.’

Trump took credit for preventing 1,100 jobs going to Mexico from Carrier Corp., a subsidiary of a defense contractor but for the employees, that became a bad dream about a red herring. The final jobs saved is likely to be less than 1,000 and may only be 700; a largely symbolic gesture that cost the state of Indiana $7 million.

Meanwhile, across the Atlantic, Theresa May, Britain’s Prime Minister, has been given the right to trigger Brexit late next March. But her plan may be subject to parliamentary scrutiny. Brexit is turning out to be something that most of the people who voted for it, and some of those who didn’t, would not recognize. It will be an ongoing saga for an indeterminate time.

Manufacturing in the U.S., Europe and most of Asia came through November in quite good health, and an optimism that things will continue accordingly through the end of 2016 into 2017. The U.S. private sector created 216,000 jobs in November according to CNBC, 178,000 according to The Washington Post. The unemployment rate eased back to 4.6 percent.

The ISM PMI figure for U.S. manufacturing continued in growth mode in the month of November, with the PMI reading moving to 53.2, up from October’s 51.9 percent. The overall economy grew for the 90th consecutive month.

The IHS Markit PMI for the U.S. manufacturing sector increased to 54.1 in November, up from 53.4 percent in October, on the back of the fastest rise in production in 20 months with an accom-panying rise in new orders.

Employment and input buying increased during November, and cost inflation slowed from October’s two-year peak. The increase was mostly domestic driven, with only a slight contribution from exports.

The five ISM components are equally weighted at 20 percent each. The IHS Markit components are weighted: 30 percent New Orders, 25 percent Pro-duction, 20 percent Employment, 15 percent Supplier Deliveries and 10 percent Raw Materials Inventories.

The Bureau of Economic Analysis revised its estimate for the annual rate of Real GDP growth in the third quarter of 2016, putting it at 3.2 percent, up from the advance estimate of 2.9 percent. The figure for the second quarter was 1.4 percent.

GALLUP’s U.S. Economic Confidence Index was running at post-recession highs following the election, at +10 in late November, with the coincident job creation index matching the highest level in Gallup’s nine-year trend at +33.

World crude steel production for the 66 reporting countries for the month of October 2016 was 136.52Mt, up 3.3 percent y-o-y. U.S. crude steel produc-tion for October 2016 was 6.38Mt, down 2.5 percent y-o-y.

Primary Global Aluminum Production in October 2016 was reported at 4.986 million tonnes, of which 2.727 million tonnes, over 54 percent, was produced in China. The Gulf Corporation Council (GCC) produced 440,000 tonnes, North America 337,000 tonnes, Western Europe 320,000 tonnes and Eastern and Central Europe 337,000 tonnes.


by Royce Lowe


The Institute for Supply Management PMI figure registered 53.2 percent in November, up 1.3 percentage points from October’s 51.9 reading, representing the third consecutive month of growth in manufacturing. There was growth in the overall economy for the 90th consecutive month.

Eleven of the 18 manufacturing industries reported growth in November in the following order: Miscellaneous Manufacturing; Petroleum & Coal Products; Paper Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Chemical Products; Fabricated Metal Products; Plastics & Rubber Products; Machinery; Nonmetallic Mineral Products; and Primary Metals. The six industries reporting contraction in November, listed in order are: Printing & Related Support Activities; Wood Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Furniture & Related Products.

Comments from the manufacturing sector were to all intents and purposes positive, and most industries are looking for increased demand and strong bookings going into 2017.

Following is a summary of the five major indexes, each weighted at 20 percent in calculation of the PMI number for November. October’s readings are in parentheses:

    New orders                     53.0 (52.1)

    Production                      56.0 (54.6)

    Employment                   52.3 (52.9)

    Supplier Deliveries                  55.7 (52.2)

    Inventories                    49.0 (47.5)

The following five components are not instrumental in the PMI calculation, but are an important part of the manufacturing industry:

Customer Inventories    49.0 (49.5) 

    Prices                             54.5 (54.5)

    Backlog of orders           49.0 (45.5)

    New export orders          52.0 (52.5)

   Imports                         50.5 (52.0)

Commodities up in Price in November were:

Aluminum*; Caustic Soda; Copper; Corrugate (2); Corrugated Boxes; Linerboard; Methanol (2); Scrap Steel; Stainless Steel (8); Steel (11); and Steel — Cold Rolled.

Commodities Down in Price:

Aluminum* (2); Natural Gas; Plastic Resins; Propylene; and Steel — Hot Rolled (4).

Commodities in Short Supply


Note: The number of consecutive months the commodity is listed is indicated  after each item.

*Reported as both up and down in price.

CANADA’S IHS Markit Manufacturing PMI increased to 51.5 in November from October’s 51.1 reading, as manufacturing growth picked up to a four-month high.. Production and new orders were up, with the fastest rise in new orders since April and the first rise in export orders since June. Employment was up.

Alberta and B.C. were the best performers, showing their fastest rise in new orders since August 2014. Ontario and Quebec showed lower new order volumes, largely reflected in lower export sales. Canada produced 1.03 Mt of crude steel in October, up 10.5 percent y-o-y. Canada’s light vehicle sales were up 10.4 percent y-o-y to 160,573 units, bringing the total for the year to 1.823 million units, just 75,000 short of the record 1.898 million set in 2015.

MEXICO’s PMI in November was at 51.1, down from 51.8 percent in October. Growth in production and new orders was relatively subdued compared to that in October, and there was a reduction in export orders.

Mexico produced 1.65Mt of crude steel in October, up 21.7 percent up y-o-y.

Here are the latest figures for US new car and light truck sales for ‘the big eight’ for November 2016.

The ‘Big Eight’ November   ’16 November   ’15


% change

General Motors 252599 229296 10.2
Ford 196441 186889 5.1
Toyota 197645 189517 4.3
FCA 158389 184871 -14.3
Honda 122924 115441 6.5
Nissan 115136 107083 7.5
Hyundai/Kia 115011 105560 8.9
VW 29672 23882 24.2
Total new cars and light trucks 1380558




Total cars                  531,108                547,946                -3.1


Total l/trucks           849,450                783,110                8.5

THE ECONOMIST magazine, in its latest weekly report on world economies, highlights changes in Gross Domestic Product (GDP), Industrial Production, Consumer Prices and Unemployment Rates for what it considers the world’s major economies. These data are not necessarily good to the present day, but are mostly applicable to at latest the past two months, and show definite trends in the world economy. The figures are qualified as being the latest available, and with reference to a given quarter or month.

The figures for GDP represent the % change on the previous quarter, annual rate. The industrial production figures represent year-on-year changes, as do the consumer prices increases. The unemployment figures, %, are for the month as noted.





Consumer Prices Unemployment
United States +3.2 (qtr) – 0.9 (Oct) +1.6 (Oct) 4.9 (Oct)
Canada +3.5 (qtr) +2.8 (Sept) +1.5 (Oct) 7.0 (Oct)
China +7.4 (qtr) +6.1 (Oct) +2.1 (Oct) 4.0 (Qtr 3)
Japan +2.2 (qtr) – 1.3   (Oct) +0.2 (Oct) 3.0 (Oct)
Britain +2.0 (qtr) +0.3 (Sept) +0.9 (Oct) 4.8 (Aug)
Euro Area +1.4   (qtr) +1.2 (Sept) +0.6 (Nov) 10.0 (Sept)
France +1.0 (qtr) -1.1 (Sept) +0.5 (Nov) 10.2 (Sept)
Germany +0.8   (qtr) +1.1 (Sept) +0.8 (Nov) 6.0 (Nov)
Italy +1.3   (qtr) +1.8 (Sept) +0.1   (Nov) 11.7 (Sept)
Spain +2.9   (qtr) +1.2 (Sept) +0.6 (Novt) 19.3 (Sept)
India +8.3   (qtr) +0.7 (Sept) +4.2 (Oct) 5.0 (2015)
Brazil – 3.3   (qtr) -4.9 (Sept) +7.9 (Oct) 11.8 (Oct)
Taiwan + 3.9 (qtr) +3.7 (Oct) +1.7 (Oct) 3.9 (Oct)
Mexico +4.0   (qtr) -1.3 (Sept) +3.1 (Oct) 3.6 (Oct)

by Chris Kuehl, Ph.D.

look-aheadBusiness data has been more than unpredictable of late. The elections are to be thanked for much of this. There was a great deal of flux during the campaign as everybody seemingly waited to see what would happen next. The surprise win for Trump set off alarm bells, but these quickly faded as it was assumed that his policies were more overtly aimed at economic growth.

“Post-election, there is still trepidation in some sectors and enthusiasm in others,” said NACM Economist Chris Kuehl, Ph.D. The data from the CMI this month reflects this shifting attitude, but

there is an additional caveat to be aware of, Kuehl noted. The response to the survey was less robust than it has been in past months. This creates some concern that readings might be skewed as compared with where they have been and might be in future months.

The overall score for the index stayed close to what it has been the last two or three months. It is slightly down at 52.9 compared with 53.5 in October and 53.7 in September. The interesting dynamic is found in comparing the favorable factors with the unfavorable ones, however. Overall favorable factors improved to 60.3, back to the level seen in September when it hit 59.5. The score for the unfavorable factors caused the most concern as it has fallen to 48 from 50.3. This reading has returned to the levels seen earlier in the year when the numbers were in the high 40s. This month is the lowest reading yet this year, but only by a point.

“The manufacturing sector has been more than a little cautious this year as the outcome of the election promised major changes regardless of who the victor would be,” said Kuehl. “That caution played out in delayed orders and very careful management of cash flow.” This pattern was visible with this last month’s readings as well. The overall score was very close to what it was last month—52.3 vs. 52.9. There was not as much similarity between the favorable and unfavorable sections, however. The gains in the favorable category, with a reading of 5, put the numbers back to where they were a month ago. They were 56.4 in October and 59.1 in September. The overall score for the unfavorable readings was 47.8, considerably lower than the previous reading of 50.6, but frankly these numbers have been weak all year with six of the 12 months under 50. The devil (as always) is in the details.


US Forging IndustryChina’s vow to eliminate 100/150 million tons of steelmaking capacity by 2020, from a total capacity of 1.2 billion tons, has culminated in the merger of Shanghai-based Baosteel Group and Wuhan Iron and Steel Group in the central province of Hubei. The two groups were combined to create China Baowu Steel Group, second only to ArcelorMittal. The company has assets of $105.9 billion and 228,000 employees. The two companies produced a combined total of 60 million tons in 2015.

The National Tooling and Marketing Association has stressed to the U.S. International Trade Commission the fact that high duties on tool steel imports would adversely affect U.S. tool and die manufacturers and would threaten thousands of jobs.

Tool steel is produced in insufficient quantities and grades in the U.S. to satisfy requirements, and as such imports of such products are a necessary part of U.S. manufacturing.

Is a steel problem bringing grief to France’s flagship energy supplier? EDF (Electricité de France) is in the midst of a crisis involving higher-than-specified carbon contents found in certain steel samples taken from (mostly) bases of cylindrical steam generators. The tests were ordered by the Nuclear Safety Authority (ASN) who are concerned that the high carbon levels, in some cases 50 percent above permitted levels, may cause fracture ‘in case of a sudden change in the temperature of the steel.’ In question are Creusot Forge, owned by France’s Areva, and Japan Casting and Forging Corporation.

Eight reactors are idle and coal is being burned at a rate not seen since the 1980s. Were data falsified and why was the problem not spotted? ASN are auditing files that go back decades.

Bad news for EDF and its customers – it has 88 percent coverage in France – and possibly bad news for the Paris Climate Change Agreement.



us-car-factiryGLOBAL AUTOMAKERS delivered 7.90 million vehicles in October, up 4.6 percent y-o-y. North America took 23 percent of the vehicles, Europe 22 percent, South America 4 percent, Asia/Pacific 50 percent and other markets 1 percent.

Tesla Motors will buy German manufactur-ing technology provider Grohmann Engineering GmbH in prepar-ation for production of its first mass-market model.

Grohmann will become the basis of an automation division Tesla is setting up in Germany. Several critical elements of Tesla’s automated manufacturing systems will be designed and produced at Grohmann’s plant, and it is believed these will aid both speed and quality of production and reduce capital expenditures required per vehicle.

The Model 3, priced at $35,000 before government incentives, will go on sale in late 2017, and Tesla is looking to increase production capacity by ten times from 2015 levels to 500,000 units per year by 2018.

VWVolkswagen has agreed with workers to cut up to 30,000 jobs worldwide, and to save $3.9 billion on expenses, as the company fights its way back from the emission-cheating scandal and to prepare to invest in electric vehicles, when it will need to hire software engineers and battery specialists. VW is talking of producing 3 million electric cars per year by 2025.

Reduction of the workforce by around 5 percent will be done by attrition as VW agreed to refrain from forced layoffs until 2025.

Toyota recently settled a class-action lawsuit for approximately $3.4 billion brought by owners of trucks and SUVs who complained of a lack of rust protection on vehicle frames, and consequent corrosion problems. One-and-a-half million Tacomas, Sequoias and Tundras, sold between 2005 and 2010 were involved.

Toyota admitted no wrongdoing, but offered to inspect the affected vehicles, to replace the frames free of charge, and to reimburse those owners who have already replaced the frames at their own expense.

President-Elect Trump’s threatened 35 percent tariff on cars made in Mexico would, Ford’s CEO Mark Fields reminds us, be imposed on the whole auto sector. Mr. Fields sent the President-Elect a congratulatory letter – on his election.

Following the reassurances that the British Government gave to Nissan, which persuaded them to continue manufacturing in the UK post-Brexit, the boss of Ford Europe has stated he will be looking for similar reassurances.


Arconic, the Alcoa aerospace, automotive and construction products spin-off, reports a new, multi-year, $1 billion contract with Airbus to supply aluminum sheet and plate products for commercial aircraft programs, starting in January 2017.

Arconic will effectively be the sole supplier to Airbus for specific applications, including some wing, fuselage and structural components. Aluminum and aluminum-lithium alloy flat products will be processed on a new plate-stretching line which will reduce stresses in the products and allow easier forming and machining.

geGE Aviation has a new ‘memorandum of understanding’ (MOU) with COMAC, the Commercial Aircraft Corporation of China, concerning ‘digital collaboration’ that will outline how the two aviation-focused manufacturers plan to work together on digital solutions and applications for customer and product support monitoring and diagnostics, ‘intelligent aircraft’ and Brilliant Manufacturing – a GE software that will predict and react to changes in supply-chain conditions, manufacturing resources etc. GE says this partnership will assemble scientific personnel from the two companies so they may bring some semblance of scientific order to the ten billion data points produced annually by the aviation sector.

Following CEO Alain Bellemarre’s cost-cutting measures, profit forecasts at Bombardier are looking much more positive. The company has slowed the rate at which it has been gobbling up funds, and analysts are gaining confidence in the company’s ability to meet its long-term targets.

President-Elect Trump, referring to a new order for Airforce One, says he wants Boeing ‘to make a lot of money but not THAT MUCH money’ and is suggesting that the order should be cancelled. 

ISSUES OUTLOOK by Royce Lowe and Tim Grady

boeingSeattle, we have a problem? In spite of monthly reminders that the number of jobs in manufacturing is decreasing, we are periodically party to the news that almost 3.5 million manufacturing jobs will need to be filled in the next decade. At Boeing, some 35 percent of the 29,645 machinists in the company’s Seattle industrial hub are 55 or older, whereas overall, 23 percent of the 15.3 million Americans working in manufacturing are in that age group.

There has been a voluntary layoff offer with Boeing controlling who leaves; but people retire, and whichever way the situation is looked at there is a potential problem. The company is stepping up training and mentoring programs for the short term, and for the long term is investing in vocational training at middle schools, where it is trying to impress upon young people all the worthwhile qualities of manufacturing as a career; in other words, how ‘cool’ it is.

Siemens, meanwhile, has granted $357 million in software to Clemson University. The software will be incorporated into student coursework and projects that relate to computer assisted design, engineering simulation, industrial design, digital manufacturing and manufacturing management in Clemson’s College of Engineering, Computing and Applied Sciences.

China’s R & D spending, and innovation is overtaking that of the U.S. according to analysts from Credit Suisse Group AG. This is all to help China switch from investment-driven to knowledge-intensive growth as its labor force shrinks.

China’s R & D spending in 2015, at $205 billion, was more than double the 2009 figure, and as a proportion of GDP it climbed to 2.1 percent from 1.7 percent over the same period.

CEOs and Leaders, mainly American, have signed an open letter to President-Elect Trump, urging him not to withdraw the U.S. from the climate-rescue Paris agreement.

In a similar vein, American multinationals, with $228 billion in China investments have taken exception to Trump’s talk of trade confrontation with China., stating that such a confrontation would potentially disrupt China’s vast chain of suppliers throughout Asia, along with the price of consumer goods it exports to worldwide markets.

India’s Prime Minister MODI wants more manufacturing jobs in his country, which currently contributes only about 6 percent of the value of phones sold in India through local manufacturing or assembly. This could increase to 30 percent in five years.

India overtook the U.S. this year to become the world’s second-largest smartphone market and forecasts are for 1 billion sales in the next five years. In China and South Korea 70 percent and 50 percent respectively are the figures for work done domestically.

mtr-adManufacturing Talk Radio is experiencing more listeners live and downloading the podcasts each month, with over 400,000 downloads over the last 36 months. It is also kicking off a charter advertising program that companies can lock into at a very economical cost. It includes a 30-second ad during several radio shows, display ads in the Manufacturing Talk Radio website, and a display ad in this monthly newsletter, along with some additional exposures in show announcements. Advertisers who are interested in getting more details should send an email to and put ADVERTISING in the subject line.

Charter advertisers will obtain favourable ad rates for all of 2017.

Manufacturing Talk Radio is also expanding its content to include special in-depth reports by thought leaders and industry experts, along with on-site interviews with manufacturing mavens migrating from the 20th Century mass production model into the 21st Century specialized production model from concept to consumer and back again – a 360-degree approach to making products designed for smaller but more plentiful market groups or individuals.

Visit often for updates.


energyCanada’s Prime Minister Justin Trudeau is facing off against Donald Trump on Old King Coal. Canada gets 80 percent of its electricity from non-emitting sources, and will phase out traditional coal power by 2030.

Coal power represents about 8 percent of Canada’s greenhouse gas emissions and accounts for 11 percent of the country’s electricity.

Ontario, Canada’s most populous province phased out coal over the past decade with a resulting improvement in air quality.

Electricity rates have roughly doubled.

Tesla Motors Inc. and SolarCity Corp shareholders approved Tesla’s purchase of

the solar installer. Over 85 percent of Tesla shares voted in favor and SolarCity’s shareholders also approved the $2 billion acquisition.

Despite major investors’ worries about the debt Tesla will be taking on, one Austen Allred, an executive at a San Francisco startup, tweeted Elon Musk to say he’d put all his money into Tesla and didn’t care if he lost it all, as he liked what Musk was doing and had done. Musk was suitably gracious in his acknowledgement. 

France’s TOTAL, one of the world’s biggest oil companies, has signed a memorandum of understanding (MOU) with Iran’s National Oil Company for the development of phase II of South Pars, the world’s largest natural gas deposit. As such the French group is the first western oil company to return to Iran. After many months of discussion a contract worth over $2 billion is in the offing. It is also a reward for a long presence in the country for a company that never closed its office in Teheran, not even during the sanctions period.

Iran has the world’s fourth-largest oil deposits and the largest (at 8 percent of global reserves) of natural gas. Total will act as project operator alongside China’s CNPC and Iran’s Petropar. Its role will be production of gas in a new zone of South Pars and the use of this gas to supply a liquefied natural gas plant. Negotiations are not complete but the final agreement should be signed within six months.

Solar-Panel Roads? Many methods of generating electricity have been tried over the years, but maybe this is totally new. A unit of Colas SA, a subsidiary of France’s Bouygues SA, has designed solar panels that embed into roads. Work is progressing on a large test site in Northern France.

The panels, now being built into road surfaces, will withstand the weight of an 18-wheeler truck. They are the result of some five years of research and laboratory tests and there are plans to commercialize in early 2018.

Why? It is said that solar farms use land that could otherwise be used for agriculture. Plans are afoot for further tests in Calgary, Alberta; the U.S. state of Georgia; Japan, Africa and the E.U.

The idea may not take off unless there is a serious shortage of land.



IHS Markit

IHS Markit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) took a further upturn in November to 53.7 from October’s 53.5 reading, its high-est level since January 2014, on the back of strong performances from The Netherlands, Germany, Austria and Spain.

Output prices were up at the fastest pace in over five years as cost inflation rose to a 56-month record. The month saw further growth in production, new orders and employment and overall expansion for the 41st consecutive month. There was increasing demand from both domestic and export markets.

Outstanding business was up at one of the quickest rates since early 2011, with increases in all nations with the exception of Greece and Italy.

New export orders for manufactured goods rose at the fastest pace since February 2014, aided by a weak euro.


  PMI High/low
Netherlands 57.0 (55.7) 35-month high
Austria 55.4 (53.9) 66-month high
Spain 54.5 (53.3) 10-month high
Germany 54.3 (55.0) 2-month low
Ireland 53.7 (52.1) 8-month high
Italy 52.2 (50.9) 5-month high
France 51.7 (51.8) 2-month low
Greece 48.3 (48.6) 12-month low


New car registrations in Germany were up 1.5 percent in November to 276,567; in Spain up 14 percent to 92,653; in Italy up 8.2 percent to 145,835 and in France up 8.5 percent to 163,170. In all cases there was a heavy percentage of business and rental sales. As there was in the UK, where registrations were up 2.9 percent to 184,101: demand from retail customers fell for the eighth consecutive month, but there was a strong demand from business.

Crude steel production in Germany in October was at 3.51Mt, down 3.7 percent y-o-y; in Italy 2.13Mt, up 11.4 percent y-o-y; in France 1.32Mt, up 12.8 percent y-o-y and in Spain 1.19Mt, down 10.5 percent y-o-y.

Russia’s crude steel production for October was at 5.94Mt, up 2.0 percent y-o-y; Ukraine’s was 1.93Mt, down 6.1 percent y-o-y.

IHS Markit reports growth in production and new orders in the UK manufacturing economy are trailing off, but remain above long-term trends. The PMI fell from Oct-ober’s 54.3 reading to 53.4 in November.

There was solid growth in production and new orders, both domestic and export, with the weak sterling being good for export orders but bad for input costs. Orders for investment goods eased sharply in the fourth quarter. There were reports of shortages in steel, paper and timber products.

The UK produced 0.707Mt of crude steel in October, down 22.3 percent y-o-y.



 Asia Outlook

Manufacturing production continued at a fairly healthy pace in China in November, albeit with a slower expansion of total new orders. New export business was mostly stable following a slight decrease in October.

Cost cutting saw a fall in staffing, but at the slowest rate seen in 18 months.

The Caixin PMI figure for November was 50.9, down slightly from October’s 51.2 reading. 

CHINA produced 68.5Mt of crude steel in October, up 4.0 percent y-o-y; Japan 9.06Mt up 0.6 percent y-o-y; India 8.27Mt, up 12.3 percent y-o-y and South Korea 5.96Mt, down 2.1 percent y-o-y. Taiwan produced 1.86Mt in October, up 9.9 percent y-o-y.

Chinese passenger car sales for the first ten months of 2016 were up 15.4 percent y-o-y to 19,095,800 units. In October the overall market was up 18.5 percent to 2,649,900 units. 

JAPAN’s manufacturing sector saw its PMI virtually unchanged in November, falling very slightly from October’s 51.4 to 51.3 in November.

New order growth went to a ten-month high, production was up for the fourth consecutive month, and new export orders increased for the third consecutive month. Both intermediate and investment goods producers noted production growth.

Rupee demonitization, or the withdrawal of high-value banknotes, is reported to have adveresely affected growth in INDIAN manufacturing, as manifested by a softer growth in new orders and production. November saw the eleventh consecutive monthly improvement in manufacturing conditions with the Nikkei PMI albeit down to 52.3 in November from October’s 22-month high of 54.4.

The reason for the cash withdrawal was to prevent hoarding of large banknotes and accompanying tax avoidance.




In Brazil, the manufacturing downturn continues with further falls in new orders, production and employment.

The PMI for November, at 46.2, very slightly down from October’s 46.3 figure, represents the 22nd consecutive month of contraction in the Brazilian manufacturing industry. There are no signs to suggest improvement in the near term.

Brazil’s crude steel production for the month of September was 2.72Mt, a decrease y-o-y of 8.8 percent.      

The JP MORGAN GLOBAL MANUFACTURING PMI – a composite index produced by JPMorgan and IHS Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management)ticked up slightly from October’s 52.0 to November’s 52.1 reading, a 27-month high.

Of the 30 nations for which November data were available, 22 showed improved operating conditions, with growth up to a 13-month high in the U.S. and a 34-month record in the Eurozone. There was continuing, but slowing expansion in China, Japan, India and the UK. Russia and Taiwan also showed growth, but contraction was seen in South Korea, Indonesia, Thailand, Turkey, Malaysia, Brazil and Greece.

Global production was up for the sixth consecutive month in November, coincident with higher levels of new orders, both domestic and export. There was job creation at global manufacturers for the third consecutive month, with employment up in the U.S., the Eurozone, Japan, the UK, India, Canada, Mexico and Taiwan, while decreases were noted in China, S. Korea, Russia and Brazil.

Backlogs of work at manufacturers rose for the sixth consecutive month and to the greatest extent for 20 months.



earthWe now have 11 months on the record for 2016 and from the standpoint of the global economy, it will be deemed mediocre at best. And that follows 2015 which is also noted for mediocrity. So we have two relatively weak years that teetered on a manufacturing recession, but somehow escaped major contraction.

In October, we indicated a possible “large step forward based on global survey data.” Now we see in the November data a further acceleration that isn’t easily explained – from the data, we can’t pinpoint “causes” that would change the “effects” to that which we are seeing. We see the world through a growth lens, and there hasn’t been much to observe in the last two years.

Now we are closing the books on November and in reviewing the data from 21 countries, we find 19 are growing and two (South Korea and Brazil) are declining. Among those growing, the U.S., the EZ, and the UK are the leaders. In the seventh year of a business cycle, a reacceleration of this nature is difficult to explain.


The Eurozone PMI (53.7, +0.2) rose to its highest level since January 2014. The strong showing was led by Netherlands (57.0, +1.3), Austria (55.4, +1.5), Spain (54.5, +1.2), Germany (54.3, -0.7), and Ireland (53.7, +1.6).

The UK PMI (53.4, -0.9) reveals slower growth when compared to October, but they are in their fourth month of growth following the BREXIT. Weaker sterling may make it difficult to sustain recent output levels.

In November, China’s Official Report, the CFLP PMI (51.7, +0.5) rose to its highest level in since July 2014, while the Caixin China General Manufacturing PMI (50.9, -0.2) decelerated slightly, but remains in positive territory for the fifth consecutive month. In North America, Canada (51.5, +0.4) reported growth for the ninth month following a seven month con-traction.

Mexico (51.1 -0.7) recorded its 40th consecutive month of 12/5/16 growth, however, a weaker trend is apparent as the PMI has averaged only 51.2 percent during the past six months.


Actually, in the overall, manufacturing is looking a better more solid at the moment with the PMI numbers moving in the direction of expansion and strengthening for most countries and most areas of the U.S. How long that positive riff continues depends largely on the new incoming administration of President-elect Donald J. Trump and several elections happening in Europe in 2017.

Last Months Issue can be seen HERE


Jan 2016
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August 2016
September 2016
October 2016
November 2016