The Global Manufacturer

Economics: The Week in Review

An eventful and choppy week for the U.S. economy as it continued to recover from the Great Recession in fits and starts. Concerns grew that budget tightening was creating a drag on the fragile economy and would likely cause the Federal Reserve to continue its monetary stimulus policy. There was little this week to support the idea of a manufacturing renaissance.

ISM Manufacturing Index - Manufacturing activity expanded for the fourth consecutive month, according to purchasing managers. The ISM Report on Business index was 51.3% in March, indicating expansion but at a slower rate than in January. The employment index grew to 54.2, while the new orders and production indexes also grew, although at slower rates.

“New export orders are at an 11-month high, while import orders ­ arguably a better measure of manufacturing activity according to a recent FRB St. Louis paper ­ are at a 13-month high. With official Chinese PMI rising to 50.9, it would appear that global manufacturing activity is slowly recovering from last year's slump.” – Michael Dolega, economist, TD Economics

ADP Employment Report – The March jobs report from payroll firm ADP portended a weakening jobs picture as private sector jobs picked up by 158,000, well down from February’s revised figure of 237,000.

“Job growth moderated in March. Construction employment gains paused as the rebuilding surge in the wake of Superstorm Sandy ended. Anticipation of Health Care Reform may also be weighing on employment at companies with close to 50 employees. The job market continues to improve, but in fits and starts.” – Mark Zandi, chief economist, Moody’s Analytics

Auto Sales– Good times continued in Detroit as sales totaled 15.2 million in March and most automakers reported increased year over year sales. Sales increased for Honda, GM, Ford, Chrysler, Toyota, Nissan and Volkswagen.

“As in February, cross/utility vehicles, large pickups and large SUVs provided the spark.” – Haig Stoddard, WardAuto

U.S. Employment – The jobs report sent the stock market reeling as payrolls increased only by 88,000. The unemployment rate edged down to 7.6% but that was due to a drop in the labor participation rate. Manufacturing employment fell in March by 3,000.

“[O]nce again we see a disappointing seasonal slowdown unfold as we head into spring. What is even more troubling about the most recent slowdown is that it takes place even before the sequester cuts materially hit the economy.” – Conference Board

U.S. Trade Deficit – Defying analysts’ predictions, the U.S. trade deficit in February fell to $43 billion from $44.5 billion in January. Part of the improvement was due to the continuing increase in shale oil production and the resultant decrease in petroleum imports.

“Monthly improvements revealed this morning in America’s huge, chronic trade deficits with China, and in manufacturing and high tech products, seem entirely driven by import drops and the minimal domestic growth they represent.” – Alan Tonelson, research fellow, U.S. Business and Industry Council

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