Metals Manufacturing Outlook Aug 2015

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. Today, Metals & Manufacturing Outlook™ (formerly MetalsWatch!) has a global circulation of 85,000 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 Subscribe at the bottom of the page.


Publisher’s Statement

In this issue, we are pleased to introduce Norbert Ore, a noted supply management leader whose career has focused on value creation in global supply chains. In addition to his supply chain work he has found time to become a successful entrepreneur, a spokesperson for a prestigious economic report, an advocate for small businesses, and a sought after speaker.

Mr. Ore is Director, Head of Industry Surveys for Strategas Research Partners, a macro research firm specializing in economics, policy research, and technical analysis. Norbert will also be on Manufacturing Talk Radio as Senior Correspondent on Global Business Surveys and Analysis.

He is an acknowledged expert in purchasing and supply management having attained the status of Certified Professional in Supply Management (CPSM) and Certified Purchasing Manager (C.P.M.). He also holds a FINRA Series 7 professional qualification.  Additionally, he is a winner of the prestigious J. Shipman Gold Medal, which is presented annually by the Institute for Supply Management (ISM) for leadership and service in the field.

Norbert is best known for his work with ISM’s Manufacturing Business Survey Committee.  For 15 years, he served as chair of the committee, a position which gave him responsibility for compiling, writing, and releasing the ISM Report on Business®, the monthly economic report recognized as a leading indicator of the U.S. economy. He holds an undergraduate degree in business and a master’s in organizational management.

A new feature this month is called a scattergram, a tool for assessment of the global economy in one chart.  This is a unique way to display the composite index from 18 global business surveys relative to expansion-contraction and the degree of acceleration-deceleration month over month. The chart is provided courtesy of Strategas Research Partners, a macro economic research firm specializing in economics, policy research, and technical analysis.  It can be found in Section VIII. Global Summary.   In addition to the chart, we will include the global summary by Mr. Ore.

Mr. Ore joins Mr. Royce Lowe, our Senior Contributing Writer who helped relaunch this newsletter which was expanded from MetalsWatch® into Metals and Manufacturing Outlook® and is distributed to over 60,000 recipients worldwide. Born near Sheffield, England, Mr. Lowe is a qualified metallurgical engineer and (French to English) translator, who worked for many years in metallurgy, sales and purchasing in the steel industry in both Canada and the UK. He has written numerous articles on the steel industry’s history, metallurgy and marketing, and is known as the Man of Steel for his depth of knowledge in metallurgy.  Royce lives in Languedoc Roussillon where he writes for this newsletter.

We hope you enjoy this issue of Metals and Manufacturing Outlook as All Metals & Forge Group presents a look at manufacturing around the world.

Lewis A. Weiss, Publisher
Tim Grady, Editor-in-Chief


by Royce Lowe

Global Business People Stock Exchange Finance City Concept

In the last little while we’ve seen Greek bank shares collapse, the worst Greek market sell-off in history, the Greek manufacturing output fall to its lowest ever recorded level, high unemployment and the IMF withholding support for a new bail-out deal. This crisis is far from over, although a new bailout is at hand. However, it is doubtful that Greece can service a debt load well more than its GDP, although Greece’s European creditors see no need for a debt write-off.

We’ve also seen the Eurozone manufacturing economy holding its own in spite of all this. The US manufacturing economy looked a little better in July, as did those of India and Japan. China’s  economy is in a downturn at the moment.

The PMI figure from the Institute of Supply Management was at 52.7 percent in July, 0.8 percentage points below June’s 53.5 figure, still representing manufacturing expansion for the 31st  consecutive month and growth in the overall economy for the 74th consecutive month.

On the back of the sharpest increase in production volumes for three months and new orders increasing at the fastest pace since March, the Markit PMI for the US manufacturing sector rose to 53.8 percent in July, from June’s 53.0 reading.  Job creation is up, but moderating, across the US manufacturing sector in July.

The strong dollar, on the other hand, is seen to be hurting new export business, while there is suggestion from some quarters that reshoring has also helped growth.

The Bureau of Economic Analysis came out with its ‘advance’ estimate for the annual rate of Real GDP growth in the second quarter of 2015, placing it at 2.3 percent. The second estimate will be released on August 27. A further revised figure for the first quarter put the annual rate of real GDP growth at 0.6 percent. This compares with the previous ‘final’ figure of minus 0.2 percent.

The Dun and Bradstreet Economic Health Index for July showed that 231,000 new non-farm jobs were added to US payrolls in the month. The Business Services segment continued to lead, with solid support from Trade, Transportation and Utilities.  Following three straight months of decline, the Small Business Health Index bounced back 2.1 percent in July.  Dun and Bradstreet note a continuing year on year decline in US business health, but a month-on-month improvement for the past two months.

GALLUP’s US Economic Confidence Index dropped to -12 at the end of July, whereas the Gallup Job Creation Index for the month of July stayed at the record high figure of +32.

World crude steel production for the 65 reporting countries for  the month of June 2015 was 136Mt, down 2.4 percent from the June 2014 figure. The capacity utilization ratio, at 72.2 percent, was down 3.5 percent y-o-y, and down 0.1 percent on May 2015.

US crude steel production, for June 2015 was 6.7Mt, down 8.5 percent y-o-y.

Primary Global Aluminum Production in June 2015 was 4.902 million tonnes. Of this total, 2.756 million tonnes, over 56 percent, was produced in China. The Gulf Corporation Council (GCC) produced 421,000 tonnes and  North America 368,000 tonnes.

Here are the latest figures for US new car and light truck sales for ‘the Big Eight’ for July 2015:

The ‘Big Eight’ July ’15 July ’14 YTD % change
General Motors 272512 256180 6.4
Ford 222014 211467 5
FCA 174744 163860 6.6
Toyota 217181 215802 0.6
Honda 146324 135908 7.7
Nissan 130872 121452 7.8
Hyundai/Kia 127324 119320 6.7
VW 31300 30553 2.4
Total new  cars and light trucks 1511281 1435342 5.3

The SAAR – seasonally adjusted annualized rate – is around 17.5 million cars for the year.

General Motors plans a $5 billion investment in the manufacture of Chevrolets for emerging markets. The models are being co-developed by state-owned SAIC Motor in China, and will be manufactured and sold in China, Brazil, India, Mexico and other emerging markets, but not in mature ones.

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 least 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.


GDP Indl Prodn Cons prices Unemployt
United States +2.3 (2015) +1.3 (June) +0.1 (June) 5.3 (June)
Canada +1.6 (2015) -2.1 (Apr) +1.0 (June) 6.8 (June)
China +7.0 (qtr) +6.8(June) +1.4 (June) 4.0 (Qtr 2)
Japan +3.9 (qtr) +2.0 (June) +0.5 (May) 3.3 (May)
Britain +2.8 (qtr) +2.1 (May) nil (June) 5.6 (Apr)
Euro Area +1.5 (qtr) +1.6 (May) +0.2 (June) 11.1 (May)
France +2.5 (qtr) +2.8 (May) +0.3 (June) 10.3 (May)
Germany +1.1(qtr) +2.2 (May) +0.3(June) 6.4 (June)
Spain +3.8 (qtr) +1.8 (May) +0.1 (June) 22.5 (May)
India + 11.0 (qtr) +2.7 (May) + 5.4(June) 4.9 (2013)
Brazil -0.6 (qtr) – 8.9 (May) + 8.9 (June) 6.9 (June)
Taiwan +2.7 (qtr) -1.4 (June) – 0.6(June) 3.8 (June)
Mexico + 1.6 (qtr) -0.9 (May) + 2.9 (June) 4.4 (June)

On the people front, a skills shortage is predicted for aircraft technicians, with Boeing predicting 609,000 aircraft maintenance technicians being required over the next twenty years, along with 558,000 pilots. It is estimated that some 38,000 new aircraft will be delivered in the next twenty years.

President Obama is keen to meet his goal to double the number of apprenticeships to 375,000 in the next 5 years. Along with this, 10 Swiss companies are planning new apprenticeship programs in the U.S., and seven others announced they will expand existing ones. The Swiss apprenticeships include paid training starting in high school leading to a degree, including a government partnering with educational institutions and continuing education. The U.S. programs are similar but will extend to older workers.


by Royce Lowe
The Institute of Supply Management PMI figure registered 52.7 percent in July, 0.8 percentage points below June’s reading of 53.5, representing expansion in manufacturing for the 31st  consecutive month and growth in the overall economy for the 74th consecutive month.  Eleven of the eighteen industries reported growth in July, in order,  Textile Mills; Paper Products; Apparel, Leather & Allied Products; Printing & Related Support Activities; Furniture & Related Products; Fabricated Metal Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Transportation Equipment; and Miscellaneous Manufacturing. Five industries reported contraction in July, namely: Wood Products; Primary Metals; Plastics & Rubber Products; Chemical Products; and Machinery.

Comments on the month from Food, Beverage & Tobacco Products respondents are continuing to express concern about the Avian flu outbreak, saying in fact that fears of it are killing exports.  Fabricated Metal Products personnel speak of a summer slowdown, but also state that global orders are holding up despite international uncertainties. Both Petroleum and Coal Products and Chemical Products respondents point to low oil prices having a negative impact on their industries. Computer and Electronic Product respondents spoke of July being slower than June, but of an optimism for the balance of the year. Miscellaneous Manufacturing respondents report stable conditions with little change from July and Paper Products respondents report an abundance of containerboard in global markets. Machinery personnel report inbound logistics as being almost back to normal, while Furniture and Related Products respondents say that business conditions continue to be strong.

The following 5 components of the ISM’s PMI, New Orders, Production, Employment, Supplier Deliveries and Inventories are equally weighted and used to calculate the PMI number. A monthly PMI over 50.0 indicates an expanding economy; a number over 60.0 indicates strong manufacturing output, although overheating may occur.

  • The ISM New Orders Index for July, at 56.5 percent, was up by a slight 0.5 percentage points from June’s 56.0 percent reading, representing growth in new orders for the 32nd consecutive month. Ten industries reported growth in new orders in July, namely, in order, Textile Mills; Paper Products; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Furniture & Related Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Chemical Products. Six industries reported a decrease in new orders during July, namely: Wood Products; Primary Metals; Machinery; Plastics & Rubber Products; Computer & Electronic Products; and Transportation Equipment.
  • The ISM Production Index, is at 56.0 percent in July, an increase of 2.0 percentage points on June’s 54.0 percent reading, representing growth in production for the 35th consecutive month. Growth was noted in eight industries in July, in order, Paper Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Fabricated Metal Products; Furniture & Related Products; Food, Beverage & Tobacco Products; Chemical Products; and Machinery. Five industries reported a decrease in production in July, namely: Wood Products; Plastics & Rubber Products; Primary Metals; Transportation Equipment; and Computer & Electronic Products.
  • The ISM Employment Index for July, at 52.7 percent, is down 2.8 percentage points on June’s 55.5 reading. Growth was reported in ten industries, namely, in order,  Textile Mills; Printing & Related Support Activities; Paper Products; Electrical Equipment, Appliances & Components; Machinery; Furniture & Related Products; Food, Beverage & Tobacco Products; Transportation Equipment; Fabricated Metal Products; and Computer & Electronic Products. Five industries reported a decrease in employment in July, namely: Petroleum & Coal Products; Primary Metals; Plastics & Rubber Products; Miscellaneous Manufacturing; and Chemical Products.
  • The ISM Supplier Deliveries Index – The delivery performance of suppliers to manufacturing organizations was faster in July as the Supplier Deliveries Index registered 48.9 percent, which is 0.1percentage points higher than the 48.8 percent reported in June. This is the second consecutive month supplier deliveries have been faster than the previous month. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.  Six industries reported slower supplier deliveries in July, namely: Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Computer & Electronic Products; and Transportation Equipment. The four industries that reported faster supplier deliveries in July are: Nonmetallic Mineral Products; Paper Products; Chemical Products; and Machinery. Eight industries reported no change in supplier deliveries in July compared to June.
  • The ISM Inventories Index, at 49.5 percent for July, is 3.5 percentage points lower than the 53.0 percent reading for June. This indicates that raw material inventories are contracting following two consecutive months of growth. Six industries reported higher inventories in July, namely: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Furniture & Related Products; Transportation Equipment; and Computer & Electronic Products. Six industries reported lower inventories in July, Paper Products; Machinery; Miscellaneous Manufacturing; Chemical Products; Food, Beverage & Tobacco Products; and Primary Metals. Six industries reported no change in inventories in July compared to June.

The following 5 components of the ISM’s PMI, Customer Inventories, Prices, Backlog of Orders, Exports and Imports are not used to calculate the PMI number but are tracked for trends in the marketplace

  1. The ISM Customers’ Inventories Index, registered 44.0 percent in July, 4.5 percentage points lower than June’s 48.5 reading, meaning that customers’ inventories are considered to be too low, and lower than June’s.    Three manufacturing industries reported customers’ inventories as being too high in July, namely: Apparel, Leather & Allied Products; Plastics & Rubber Products; and Fabricated Metal Products. The eight industries reporting customers’ inventories as too low during July are: Paper Products; Machinery; Petroleum & Coal Products; Nonmetallic Mineral Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Food, Beverage & Tobacco Products. Six industries reported no change in customers’ inventories in July compared to June.
  1. The ISM Prices Index registered 44.0 percent in July, 5.5 percentage points lower than in June, indicating a decrease in raw material prices for the ninth consecutive month. In July, 9 percent of respondents reported paying higher prices, 21 percent reported paying lower prices and 70 percent reported paying the same prices as in June. Five industries reporting paying increased prices for their raw materials in July, namely: Apparel, Leather & Allied Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Plastics & Rubber Products; and Paper Products. Nine industries reported paying lower prices during the month of July, namely: Electrical Equipment, Appliances & Components; Primary Metals; Textile Mills; Fabricated Metal Products; Machinery; Nonmetallic Mineral Products; Transportation Equipment; Chemical Products; and Computer & Electronic Products.

Up in Price in July were:  None – a very unusual occurrence as noted by Mr. Brad Holcomb in his comments on Manufacturing Talk Radio aired live on August 4, 2015.

Down in Price in July were:  Aluminum (8); Brass, Copper, Nickel; Stainless Steel (9); Steel Cold- Rolled (2) and Hot-Rolled (9).

In Short Supply in June:  Eggs (2) Note: The number of consecutive months the commodity is listed is indicated  after each item.

  1. The ISM Backlog of Orders Index was at 42.5 percent in July, 4.5 percentage points lower than the June reading of 47 percent, indicating a contraction in order backlogs for the second consecutive month. Of the 87 percent of respondents who measure their order backlogs, 13 percent reported greater backlogs, 28 percent reported smaller backlogs, and 59 percent reported no change from June. Five industries reported increased order backlogs in July, namely: Textile Mills; Printing & Related Support Activities; Paper Products; Electrical Equipment, Appliances & Components; and Furniture & Related Products. The ten industries that reported a decrease in order backlogs during July are: Wood Products; Plastics & Rubber Products; Primary Metals; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Machinery; Food, Beverage & Tobacco Products; and Transportation Equipment.
  1. The ISM New Export Orders Index was at 48.0 percent for July, down 1.5 percentage points from June’s 49.5 reading, indicating effectively the second consecutive month of decrease in new export orders. The five industries reporting an increase in export orders in July are: Furniture & Related Products; Fabricated Metal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Paper Products. The eight industries reporting a decrease in new export orders in July are: Wood Products; Primary Metals; Plastics & Rubber Products; Transportation Equipment; Machinery; Chemical Products; Computer & Electronic Products; and Nonmetallic Mineral Products.
  2.  The ISM Imports Index, is at 52.0 percent in July, or 1.5 percentage points lower than June’s 53.5 reading. This represents the 30th consecutive month of growth in imports. Eight industries reported an increase in imports in July, namely: Primary Metals; Textile Mills; Furniture & Related Products; Transportation Equipment; Food, Beverage & Tobacco Products; Fabricated Metal Products; Computer & Electronic Products; and Miscellaneous Manufacturing. Four industries reported a decrease in imports during July, namely Nonmetallic Mineral Products; Plastics & Rubber Products; Chemical Products; and Machinery.

CANADA’S RBC (Royal Bank of Canada) Manufacturing PMI was at 50.8 percent in July, down slightly from June’s 51.3 figure. This does in fact represent a second month of improving business conditions, though at a very modest pace and even less than that achieved in June. It is suggested that the second half of the year will see an improvement, with a strengthening US economy and a weak Canadian dollar.

Marginal to modest increases in production and new orders kept the PMI over the 50 mark.  Overall employment was down in the month, and manufacturers are dealing cautiously with their inventory levels.  Ontario recorded the best overall manufacturing performance, with Ontario, followed by Quebec, recording the best employment increases.  Again Alberta and British Columbia came in with the least encouraging figures among Canada’s leading provinces.

Canada produced 1.03Mt of crude steel in June, down 3.1 percent y-o-y.  Canadian light vehicle sales in the month of July rose slightly from the year ago figure to 177,844 units, a new July sales record.

As part of a new program in Canada, ‘Factory of the Future,’ the National Research Council (NRC), will contribute $380 million to local manufacturers and will provide expertise and resources to get the program off the ground.

For more on Canada, see ‘The Manufacturing Scene‘ below.

Mexico saw its sharpest rise in new export orders in July since May 2011, with production growth picking up from June’s 11-month low. This was accompanied by a slight increase in employment. On the back of this, the PMI for July increased to 52.9 from June’s 11-month low figure of 52.0.

Mexico produced 1.56 Mt of crude steel in June 2015, down 0.3 percent y-o-y.  Mexico will shortly be welcoming another automotive manufacturing plant, when construction of a Daimler/Renault-Nissan plant gets underway in Aguascalientes in Central Mexico. The company, to be called COMPAS, Cooperation Manufacturing Plant Aguascalientes, will be a 50-50 Daimler/Nissan venture and $1 billion will be invested in it for the construction and operation of a manufacturing plant for premium compact vehicles. Infiniti models will be manufactured from 2017, Mercedes-Benz from 2018 and 3,600 jobs will be created by 2020.

For more on Mexico see ‘The Manufacturing Scene‘ below.


by Royce Lowe

forging-metalAllegheny Technologies Incorporated (ATI) is planning a $ 70 million expansion of its nickel-based super alloy powder production capacity. This is in response to demand for specialty materials for jet engine parts.  These parts are mainly forgings and milled parts, but there is also an increasing demand for additive manufacturing materials, including parts for aerospace, medical, electrical energy and oil and gas markets.  The nickel-based super alloys are refined into powder forms that are subsequently electroslag melted and vacuum refined.

A significant portion of the materials to be produced from this expansion are to meet the requirements of existing long-term agreements with jet engine OEMs that run well into the next decade. The expansion will also position ATI as a leading supplier of advanced powders to the rapidly growing additive manufacturing industry.


by Tim Grady

mfg Manufacturing Talk Radio has added Mr. Norbert Ore, a Senior Correspondent for Global Supply Surveys and Analysis who will first appear on the September 15th air date.  Head of Industry Surveys at Strategas, and former chair of the ISM Report on Business, Mr. Ore will provide his insights on the 18 international Purchasing Managers Indices he follows.  His comments can be read in Section VIII below.

On July 7th, hosts Tim Grady and Lew Weiss discussed the June ISM Manufacturing Report on Business® with Brad Holcomb, Chair of the ISM’s committee on that document, and then discussed the Dublin emails case that has Microsoft caught between the laws of the E.U. and the U.S.  A negative outcome of this case could negatively impact every company in the U.S. Hear it at

On July 14th, Jim Lawton, Chief Product and Marketing Officer for Rethink Robotics was on the show discussing Baxter and Sawyer, two robots designed to work alongside employees to complete repetitive tasks.  Most startling was the cost of the robots at less than $50,000 fully configured.  Is repetitive blue collar work on its way out faster than people think?  You listen and decide at

On July 21st, Dr. Daniel J. Meckstroth presented the latest MAPI quarterly economic forecast including economic indicators, employment trends, global competitiveness for U.S. Manufacturers, and other analyses from their in-depth report.  MAPI will present this material quarterly on Manufacturing Talk Radio and you can hear the July report at

Then, on July 28th, Grady and Weiss discussed Green Manufacturing with Danny Mishek, Managing Director and Co-Owner of SelfEco, Kate Bachman, Editor at the Sustainable Manufacturer Network and David Podmayersky, Chief Sustainability Officer of EarthColor.  One of the interesting takeaways from this show was that “green makes green” which means that green technology and green products don’t degrade the bottom line and enhance the top line. Tune in at

Manufacturing Talk Radio is expanding its communications universe by adding the Metals Outlook Newsletter to its media offerings, and will open up advertising in both the live talk radio show, its subsequent podcasts, and the newsletter, which will become Metals & Manufacturing Outlook, part of the voice of manufacturing globally.

Be sure to tune in to Manufacturing Talk Radio every Tuesday at 1:00 p.m. EST at  You may also listen to previous shows on your PC or smartphone, or download them from iTunes® to your iPhone or iPad.


by Royce Lowe

Global Finance Themed Cartography With Multi-Ethnic Business People On ItMarkit’s Eurozone Manufacturing Composite Purchasing Managers’ Index (PMI) for July, at 52.4, was effectively the same as June’s 52.5 reading. There was in fact a solid expansion in the Eurozone, despite a very sharp decline to a record low level in Greece. Continued growth in Ireland, The Netherlands, Italy, Spain, Austria and Germany served to offset the Greek effect. France slipped back below 50, with production, new orders and employment all going into contraction.  But overall, production, new orders – both domestic and export – and employment registered improvement across consumer, intermediate and investment goods sectors.

PMI High/low
Ireland 56.7 (54.6)
Netherlands 56.0 (56.2) 2-month low
Italy 55.3 (54.1) 51-month high
Spain 53.6 (54.5) 9-month low
Austria 52.4 (51.2) 17-month high
Germany 51.8 (51.9) 2-month low
France 49.6 (50.7) 2-month low
Greece 30.2 (46.9) Record low

Ireland does not figure directly in the Markit Eurozone numbers, but the above PMI for Ireland is in fact from a reliable source.

Passenger car registrations in Europe were again good for the month of July, with Germany showing an increase of 7.4 percent to 290,196 units, and a seven-month total up 5.6 percent to 1.91 million units. French sales were up 2.3 percent to 147, 132 units, Italy’s up 15 percent to 131,489 units and Spain’s – still on a scrappage program – up 24 percent to 102,922 units.

Crude steel production in Germany in June 2015 was at 3.8Mt, up 5.8 percent y-o-y; in Italy 1.9Mt down 11.4 percent y-o-y; in France 1.4Mt, down 1.3 percent y-o-y and in Spain 1.3Mt, down 3.3 percent y-o-y.

Russia’s crude steel production for June was at  5.64Mt, down 7.5 percent y-o-y, Ukraine’s was 2.0Mt, down 21.8 percent y-o-y.

The UK saw its Markit PMI at 51.9 percent in July, slightly up from June’s 51.4 reading. The UK manufacturing sector is still effectively reliant upon domestic consumer goods demand, and both intermediate and investment goods sectors were in contraction in the month of July.  Manufacturing employment is up for the 27th consecutive month in July, which is good for backlogs and present orders, but the manufacturing sector is in a state of uncertainty and definitely dependent upon an upturn in demand from more than the consumer goods sector.

UK Car sales in the first six months of the year were up 7 percent to over 1.3 million vehicles. June saw a 12.9 percent y-o-y increase to 257,817 units. Some 15 percent of buyers chose a UK-manufactured vehicle.

The JP Morgan Global Manufacturing PMI – a composite index produced by JP Morgan and Markit in association with ISM and IFPSM (International Federation of Purchasing and Supply Management) – was at 51.0 in July, unchanged from June, the joint-weakest reading in two years.

Manufacturing output rose for the 32nd consecutive month, with the strongest production expansion in the Czech Republic, the Netherlands, Italy and Poland. The US remained close to the top of the global manufacturing production growth league table, with its rate of expansion going to a three-month high.

In Asia there was solid expansion in Japan and India that was offset by contraction in China, Taiwan, South Korea, Indonesia and Malaysia.  Manufacturing employment rose for the 24th consecutive month in July, but the rate of jobs growth was marginal. Levels rose in the U.S., the Eurozone, Japan, the UK, Mexico, Taiwan, Turkey and Vietnam. There were declines in employment in Russia, Switzerland, China, India, South Korea, Indonesia, Brazil and Malaysia.


by Royce Lowe

China produced 69Mt of crude steel in June 2015, down 0.8 percent y-o-y; Japan 8.6Mt down 7.0 percent y-o-y; India 7.4Mt, up 0.8 percent y-o-y and  South Korea 5.9Mt, down 3.6 percent y-o-y. Taiwan produced 1.44Mt in June, down 25.5 percent y-o-y.

The Caixin China manufacturing PMI for July fell from June’s 49.4 reading to 47.8, coincident with a downturn in Chinese manufacturing gathering steam at the beginning of the third quarter. Decreases in total new orders and new export orders led manufacturers to cut production at the fastest rate since November 2011. Hence there was more job shedding, and a decline in staff numbers for the 21st consecutive month.  Employment was down again in July, with the rate of job cuts faster than that seen since February 2009.  The rate of decline in new orders received by Chinese manufacturers was the quickest since March 2014.

The Chinese automobile industry fell year-on-year in June, with total vehicle sales down 2.31 percent to 1.80 million units; passenger car sales down 3.36 percent to 1.51 million units.  For the first six months of 2015, total vehicle output was up 2.64 percent to 12.10 million units, with passenger car output up 6.38 percent to 10.33 million units. From January through June this year, total vehicle sales were up 1.43 percent to 11.85 million units, while passenger car sales were up 4.80 percent to 10.10 million units. There is uncertainty about the balance of the automotive year, particularly in view of the recent drop in manufacturing performance in China.

Things look better in Japan, where the Nikkei manufacturing PMI went from June’s 50.1 reading to 51.2 in July, the highest reading in five months. Production increased at a faster pace with a return to new order growth. Production was up at the fastest pace since February and employment up at the quickest pace since December 2014.  Japanese new vehicle sales were down 11 percent in the first half of 2015 to 2.7 million units, according to the Japanese automobile Manufacturers Association.

In India, the Nikkei PMI reading increased from June’s 51.3 to 52.7 in July.  Manufacturing gained momentum in July, with increased production growth and a stronger rise in new orders for consumer, intermediate and investment goods.  Export orders expanded at the quickest rate since February.  Despite all the positive news, there has been no increase in employment, in fact some Indian manufacturers are still cutting jobs. There are fears in some quarters that this could result in future production backlogs.

India’s Prime Minister Modi recently announced plans for a 12-week job training course for 400 million Indians over the next seven years. He speaks of transforming the country into the world’s Human Resources Capital.


by Royce Lowe

Asia EconomyBrazil’s crude steel production for the month of June 2015 was 2.8Mt, a 2.1 percent y-o-y increase.  The manufacturing PMI in Brazil, at 47.2 in July was slightly up on June’s   46.5 reading. Although this was the sixth consecutive month below 50, the reading was in fact a five-month high.

Operating conditions continued to deteriorate, albeit to a lesser extent than in June. New orders and production decreased for the sixth consecutive month in July, but the rates of contraction fell to the weakest since February.  New export orders showed signs of stabilizing. Employment numbers were reduced for the fifth consecutive month.


by Norbert Ore

The Ore Point of View on Global Business Surveys:  It seems the global economy has the potential to do more than it is doing based on the currency machinations and monetary easing taking place around the world.  But, potential means you haven’t done anything yet and that appears to be the case in July. As has been the case recently, many of the challenges – remember the “transitory” issues – of Q1 were mitigated during Q2 clearing the way for better performance in the second half. However, July doesn’t offer convincing evidence of a global step change in the second half. Of the 18 surveys that we follow, 13 are growing. Based on the JP Morgan Chase Global PMI (51.0, unch), the rate of change globally is meager.

It appears things hit bottom in Greece (30.2, -16.7) as manufacturing all but shut down during July. Hopefully, Greece can now work at getting production back to its historical position providing 0.4 percent of global GDP. The Eurozone Index (52.4, -0.1) remains somewhat encouraging as it is down only marginally against June when it posted its highest reading since April 2014. The Eurozone was again led by Netherlands (56.0, -0.2), Italy (55.3, +1.2) and Spain (53.6, -0.9), which continue to be the stalwarts. Germany (51.8, -0.1) grew for the eighth consecutive month, but the growth has been marginal as it averaged 51.6 for the period.


Figure 1: Used with Permission from Strategas Research Partners

Sources:  Strategas Research Partners, Institute for Supply Management,

Among other major U.S. trading partners, the UK (51.9, +0.5) accelerated slightly as the PMI registered its 28th consecutive month above the 50 mark. Meanwhile, Brazil (47.2, +0.7) slightly outperformed its 6 month average reading of 46.9 percent – but, the struggle appears to have no end in sight.

And then there is China. This month the official data shows the pace of manufacturing to be the same as June as the CFLP PMI (50.0, -0.2) shows minimal change. However, the Caixin China General Manufacturing PMI (47.8, -1.6) registered the largest m-o-m change since posting a 2.4 percent increase in August 2013. By China standards -1.6 pp is a large decline.

The August 11 easing of exchange rate controls via loosening of its daily trading limits may be a short term negative as they once again look for the export economy to provide growth, but should in the long term be positive as the central planners advance their education in capitalism.  (Note: The Caixin China General Manufacturing PMI was formerly the HSBC PMI).

As for North America, Canada (50.8, -0.5) rose above the 50 mark for the second consecutive month and Mexico (52.9, +0.9) accelerated following a six-month trend of deceleration. Both are reliant upon the progress of the U.S. economy and the benefit of weaker currency.  The good news is that both can “draft” off of the U.S. economy and should continue to improve.


by Royce Lowe

We’ve all heard of NAFTA, the North American Free Trade Agreement, signed in 1994, that allows free movement of many goods and services through the borders of Canada, Mexico and the U.S. This is big. It links over 454 million people and produced, in 2010, US$17.2 trillion in goods and services.  Canada and Mexico are the U.S.’s first and third trading partners, representing over 30 percent of  total US exports.

We can put figures on this to show the effects of the agreement over the years: For example in 1993, Canada’s total exports were C$188 billion, of which C$151 billion went to the U.S. The following figures give an idea of the growth that has taken place in trade of goods between the three countries since the signing of NAFTA.

U.S. – Canada Exports ($Bn) Imports ($Bn)
1994 114 128
2000 178 231
2014 312 348
US – Mexico Exports ($Bn) Imports ($Bn)
1994 51 49
2000 111 136
2014 240 294

The only year that saw a decrease in trade was 2009.

Canada – Mexico Exports ($Bn) Imports ($Bn)
1994 app 1 app 4
2000 app 1.5 app 9.5
2012 app 6 app 31

U.S. manufacturing exports to NAFTA are up 258 percent and exports of computer and electrical products, furniture, paper and fabricated metals have all more than tripled since the agreement was signed in 1994.

Canada’s trade with Mexico, as a percentage of its total global trade, went from 1.3 percent in 1994 to 3.5 percent in 2010.

There are statistics upon statistics, facts upon facts, to describe the trade of goods in and out of NAFTA, and mention of a few of these is in order. In 2014 the US shipped US$1.6 trillion around the globe, up by 27 percent from 2010. The major items were machines, engines and pumps (13.5%), electronic equipment (10.6%), oil (9.7%), vehicles (8.4%) and aircraft, spacecraft (7.7%).

In the same year Canada shipped U.S.$475 billion around the globe, up by 23 percent from 2010, with the major item being oil (27%), followed by vehicles, machines, electronic equipment, wood, aircraft and aluminum.

Mexico shipped US$ 398 around the globe in 2014, a 33 percent increase on 2010, with the major items being vehicles (21.6%), electronic equipment (20%), machines, engines and pumps (15%) and oil (10.6%).

In the case of both Canada and Mexico, some 75-80 percent of exports went to the U.S.  The agreement ensures an ongoing exchange of quality goods, right next door so to speak, with highly-skilled labor forces.

But of course it can’t stop there. The world’s too big and too many countries want to trade with (too many) countries. Talks are going on right now that will in all probability culminate in a trade agreement even bigger than NAFTA. TPP, or the Trans-Pacific Partnership, will involve, in alphabetical order, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.  Together these twelve countries count around a billion people and generate trade worth about 50 percent more than NAFTA. It’s most probable that each country has industries and products they’ll want to protect, for example Canada’s dairy farmers and Japan’s rice growers; negotiations will be tough and agreement, although most likely, is not certain.

The one country conspicuous by its absence is of course China, but odds are that it will end up wanting to join if and when agreement is reached.

Come what may, trade will go on, dumping or no dumping, tariffs or none. NAFTA is there for good, and with Mexico having over 40 trading partners and counting, things look good for that member of the agreement. Canada has a free trade deal with the EU, and in the works is a Transatlantic Trade and Investment Partnership (TTIP) between the U.S. and the EU. So it’s free trade all around, better for everybody?


by Royce Lowe

A globe and cash close up

A globe and cash close up

Times are tumultuous but nowhere more so than in Greece at the moment. It’s anybody’s guess as to what will happen there, with so many people so involved. Resolution, if such is the word, of this situation, may throw up more questions than answers.

As for the rest of the world, it’s pretty much status quo right now, with hope for a good second half of the year.

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