Manufacturing picks up in India and China, slips in Europe

[OhioChick]

Source: Reuters

2 Sep, 2010, 12.39AM IST,REUTERS

LONDON | BEIJING: Surging domestic demand helped manufacturing growth in China and Russia pick up speed in August, according to business surveys on Wednesday that conversely showed a slowing recovery in European factories. Purchasing managers indexes, which measure changes in business activity across thousands of private sector companies, showed diverging fortunes among euro zone manufacturers which expanded overall at their slowest pace since February.

The Markit Eurozone Manufacturing PMI for August dropped to 55.1 from 56.7 in July, marking its 11th month above the 50.0 mark that divides growth from contraction.

Manufacturing growth in Germany slowed in August although other recent data show Europe’s biggest economy is expanding fast. Business in France accelerated but Italy and Spain saw their manufacturing indexes slip backwards. “We are at a delicate juncture of the global business cycle. Globally there is a slowdown in the trade cycle which first affects the economies which are reliant on that,” said Silvio Peruzzo at RBS. “Just as they were benefitting from the acceleration in Q4 2009 and Q1 2010, they will now be subject to the downturn and this will amplify the divergence we are seeing.”

Britain, a major euro zone trading partner, saw growth in its manufacturing sector slow more than expected last month, led by the weakest expansion in new orders for more than a year.


Read more: http://economictimes.indiatimes.com/news/economy/indicators/Manufacturing-picks-up-in-India-and-China-slips-in-Europe/articleshow/6477223.cms

[Vehl]

1. There is an interesting graph showing the world GDP over the past half a Millenia

I find it fascinating how the major changes in the GDP% correlate strongly with major world trends/events.

[ChromeFoundry]

2. Of course it's picking up in China and India....

We have no manufacturing left in the US.

[dmallind]

3. a) It's also increasing growth in the US b)We remain by far the #1 manufacturer

[OhioChick]

4. Not for long....

China Could Overtake the United States as World’s Top Manufacturer by 2011

Jun. 22 – After gaining serious ground in 2009, a recent report says China may supersede the United States as the world’s preeminent manufacturer as early as next year, forcing the United States to relinquish a title its held for over a century.

Analysis undertaken by U.S.-based IHS Global Insight estimated the value of China’s manufacturing sector at US$1.6 trillion for 2009 in real U.S. dollar terms, almost US$1 trillion ahead of Japan in third place with US$795 billion and just US$110 billion behind the United States, whose sector ranked first in the study with a value of US$1.71 trillion.
Mark Killion, managing director at IHS Global Insight, believes it is more than likely that China will surpass the United States by 2011, but didn’t rule out a shift in the rankings this year, saying it would be a “close call.”

In the report, though, IHS stipulates that China’s manufacturing sector will trail the U.S. sector in “real inflation-adjusted” terms until “sometime around 2013-2014.” Either way, it seems as though America’s 110-year reign as the world’s leader in manufacturing is coming to an end.

http://www.2point6billion.com/news/2010/06/22/china-could-overtake-u-s-as-worlds-top-manufacturer-by-2011-6113.html

[dmallind]

7. ...and that means what in a country with 4X the population?

Should the UK be upset that we make more than them too? I have absolutely no problem with China making more than the US if and when they do, but right now they don't, and even when that changes the vullshit idea that "we make nothing here" will still be bullshit.

[Psephos]

11. Although everything you said is true, it doesn't fit the narrative.

In a match-up between the narrative and what's true, I recommend betting on the narrative. ;)

[Vehl]

6. Actually Indian orders are a boon to many US manufacturers

India buys quite a lot of US made stuff, Both in the Civilian as well as Military fields. The military ones being the bigger ticket items.
Especially now that India is rapidly modernizing its military..its buying a lot of Stuff/technology from America.

some of the recent deals in the 2009/2010 include

#
2.1 Billion for some of the newest Boeing P8 i Poseidon maritime patrol and reconnaissance aircraft
http://www.zeenews.com/news551686.html


#
Has ordered 10 C-17 aircraft (and is considering the purchase of 10-12 more)
this deal is worth 5.8 Billion
http://www.reuters.com/article/idUSN1915343420100719

#
596 Million for c130 aircraft upgrades
http://www.india-defence.com/reports/3785

#
Orders for a few thousand Javelin Missiles
India planning is to buy a few thousand Javelin Anti Tank missiles to reach its target of ~ 100000 ATGMs for its military. The Javelin is being brought as a stop gap measure till the Indian Nag missile goes into production.
http://www.spacedaily.com/reports/India_to_buy_Javelin_missiles_to_fill_gap_999.html

##
And the chance to win the Biggest deal of its kind in the world.... 10 Billion for 126 Multirole Combat Aircraft
America was bound to lose this competition (with only f16s and F18s offered initially) but with the new Lockheed Martin offer of the F35 Lightening 2, most people believe that there is a pretty good chance that America might bag this deal
http://theasiandefence.blogspot.com/2009/04/us-f-35-bait-is-too-tempting-for-india.html


The Bottom line is..Unlike China which hardly ever buys anything from America...India does put a lot of money back in the form of purchases. After all..the trade deficit China has with America is 50 times that of the one India has with America.

[dmallind]

8. Good points, spouiled by the falseness of "unlike China"

China imports about $75B from the US annually. 7.7% of all imports

India imports about $19B from the US which is 7.2% of all imports.

In both Dollars and percentage China is slightly higher. To be honest surprised me too. China uses a lot of US machinery in its factories and construction business, as well as importing a lot of agricultural products.


By comparison 19% of US imports are from China, which is about $315B. India is not in the top list for these data - the CIA world factbook - which means it is less than 4.5%

We certainly do import more from China than we sell, but some people fall pray to the easy know-nothing prattlings of "everything is made in China" and "we don't make anything here any more". Such bullshit needs to be refuted with facts. Thanks for helping do that.

[Vehl]

9. I used the data from the ustr site, and was talking about the trade deficit differences between

those two countries

Trade Balance

The U.S. goods trade deficit with India was $4.7 billion in 2009 a 41.2% decrease ($3.3 billion) over 2008.

The United States has a services trade deficit of $1.6 billion with India in 2008 (latest data available)
http://www.ustr.gov/countries-regions/south-central-asia/india

Trade Balance

The U.S. goods trade deficit with China was $226.8 billion in 2009, a 15.4% decrease ($41.2 billion) over 2008. The U.S. goods trade deficit with China accounted for 45.3% of the overall U.S. goods trade deficit in 2009.

The United States has a services trade surplus of $6.1 billion with China in 2008 (latest data available).
http://www.ustr.gov/countries-regions/china

The india US trade deficit decreased by 41% in just one year. I believe that this would be reduced even further in the coming years, while China's on the other hand don't seem to be doing that anytime soon.

also the 50 times comment i made was the trade deficit of India-America compared to that of the trade deficit of China-America

[Luciferous]

17. My husband works for a manufacturing company in Northern IL

and they are forecasting a 43% increase in sales over the next year. They have also hired 20 new temps (yes, I realize they are just temps, but that's still 20 people who are working and making money) and are starting up a 2nd shift to meet demand. So I guess there is still some manufacturing left in the US.

[Turborama]

5. Indonesia's another country in that region worth keeping an eye on...

Indonesia’s economic growth beats forecast
http://www.themalaysianinsider.com/business/article/indonesias-economic-growth-beats-forecast/

Indonesia's growth beats forecasts and may accelerate
http://www.foxbusiness.com/markets/2010/08/05/indonesias-growth-beats-forecasts-accelerate/

Indonesia posts 6.2 per cent growth in second quarter
http://economictimes.indiatimes.com/news/international-business/Indonesia-posts-62-per-cent-growth-in-second-quarter/articleshow/6261272.cms

UPDATE 1-Indonesia - Market Factors to watch - Sept 2
http://www.reuters.com/article/idUSJAK49157220100902

[bemildred]

10. Listen to the spin:

"Manufacturing growth in Germany slowed in August although other recent data show Europe’s biggest economy is expanding fast.

[Psephos]

12. Perhaps growth in nonmanufacturing sectors is outpacing a reduction in the rate of mfg. growth?

I realize that's an esoteric analysis, but someone had to do it.

[bemildred]

14. Or it could be random month-to-month variation in your statistics.

They don't make it clear, but I think you need to eliminate normal variation in measurement before you start attributing the "difference" to something.

[Psephos]

16. I don't have any statistics, beyond the information in the OP.

That wasn't my point.

Journalists tend to concern themselves with trendline value at a given moment instead of the line's derivative. It's probably less about spin than about innumeracy, imo; ignorance is often a better explanation than conspiracy, except when one is in thrall to politics.

Signal-to-noise ratio is not large in small time slices - something we both agree on.

[bemildred]

18. Journalists are liars and idiots, generally, "news readers" and paid shills.

I'm not saying there are no exceptions.

The first thing is to make sure everybody knows that they are lied to and mislead routinely, to make that a public fact.

Innumeracy is certainly a problem, but it puts the issue on the lied to, not that liars when you view it in that way, and I disagree with that. With issues that matter and are of fundamental public interest deliberate dissembling is a bad thing, against the public interest, and it ought to be exposed and condemned by those of us who are not innumerate.

It is always good to keep Hanlon's Razor in mind, and I'm not trying to suggest that newsreaders, for example, are actually evil people, as a generality.

http://en.wikipedia.org/wiki/Hanlon%27s_razor

[dmallind]

13. These are not incompatible

If a car is going at 100mph and slows to 90mph it is still going fast.

Remember these data measure the rate of growth not growth itself. If the rate of growth slows, it is still expansion, just not as fast as before.

[bemildred]

15. "If the rate of growth slows, it is still expansion, just not as fast as before."

Thanks for clarifying that. The money phrase is: "expanded overall at their slowest pace since February". Unless the expansion "overall" was at a record rate in the month in question, you can always say that, there is always a month in the past when expansion was faster (by definition.) It means next to nothing.

This seems to be what it's based on: "The Markit Eurozone Manufacturing PMI for August dropped to 55.1 from 56.7 in July, marking its 11th month above the 50.0 mark that divides growth from contraction."

The one thing they do not mention is that Germany and the Euro-zone are doing way the heck better than we are.