March manufacturing: China up, rest of the world trending down

Now that the IHS Markit and ISM purchasing manager survey index data (PMI) have been released, changes to manufacturing activity around the world is in March are becoming clear. China is up as manufacturing has comeback online following the extended Chinese New Year lockdown. Meanwhile, as COVID-19 takes a firm grip on countries around the world, manufacturing activity is showing signs of weakness. The interactive map below shows an overview of manufacturing PMIs around the world for March 2020, and the pop up contains information on the development since January and a forecast for the next four quarters. Interactive Map: Manufacturing PMIs in March 2020 and Forecast to Q1-2021 (Source: IHS Markit, ISM, Tradingeconomics.com)

.embed-container {position: relative; padding-bottom: 80%; height: 0; max-width: 100%;} .embed-container iframe, .embed-container object, .embed-container iframe{position: absolute; top: 0; left: 0; width: 100%; height: 100%;} small{position: absolute; z-index: 40; bottom: 0; margin-bottom: -15px;} While the full extent of the drop of manufacturing activity won’t be clear for a number of months, until actual industrial production and business output become available, PMIs — which are based on surveys of purchasing managers around the world — give a good near-time idea of both sentiment and activity. Some observations for key markets: China is back into growth territory with the index at 50.1. This is good news since China in 2019 accounted for about 21% of global industry, up from about 8% in 2020. However, weakness in economies in other parts of the world is expected to have an impact, with a drop expected in the second quarter. In Taiwan, which has not been hit hard by COVID-19 cases, the PMI increased slightly to 50.4. At this stage, Korea and Japan are not expected to show improvement until Q3 or Q4 of 2020. Meanwhile, across the euro zone, PMIs dropped. However, the drop was not as extreme as expected since economic activity in the manufacturing sector has managed to hobble along despite shutdowns. The automotive industry, which was already facing a bad year, has shut down production activity in key markets across Europe and in the U.S. A further drop is expected for Q2, but improvement could come after that. Development in Italy and Spain is expected to lag the rest of the continent. In the U.S., the manufacturing PMI slipped into slightly negative territory in March. A further drop is expected in April. The forecast indicates that positive territory can be expected in Q1 of 2021. The ISM PMI survey results released April 1 warrant further analysis. New orders, production, backlog, employment, prices and new export and import orders all dropped. Supplier deliveries have slowed due to supply chain disruptions resulting from the prolonged shutdown in China, which continued well into March. Overall inventory levels have continued to trend downward. However, not all sectors have performed badly. Sectors such as transportation equipment, machinery and those linked to the petroleum and coal industry have seen a decline as a consequence of the rapid fall in energy prices and a negative investment climate, however the food and beverage sector, and chemicals — including pharmaceuticals — have done well. Feel free to reach out at fhorst@cargofacts.com or +352 691 137 150 to discuss what’s happening in the manufacturing space, how this could affect the air logistics business, and what this means for your company in terms of risks and opportunities.

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March manufacturing: China up, rest of the world trending down

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US air trade in 2020: Will it be good, bad or ugly?

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