The weakness in Europe was led by declines in activity in Germany, its largest economy, with the IHS Markit/BME Germany Manufacturing PMI plummeting to the lowest level since June 2009. Indeed, while German industrial production rose 0.3 percent in August, it has fallen 4.0 percent over the past 12 months.
Overall, the global economy remained weak, even with a little stabilization in the month. The J.P. Morgan Global Manufacturing PMI contracted for the fifth straight month, but output expanded ever so slightly for the first time since May.
At the same time, seven of the top 12 markets for U.S.-manufactured goods experienced a contraction in manufacturing activity in their economies in September. That was a slight improvement from eight economies in contraction in August, with Canada growing once again.
The Caixin China General Manufacturing PMI surprisingly rebounded for the second month in a row, with the headline index rising from 49.9 in July, to 50.4 in August, to 51.4 in September, the strongest reading since February 2018. In contrast, the official manufacturing PMI data from the National Bureau of Statistics of China remained in negative territory for the fifth straight month, and industrial production has decelerated to the weakest year-over-year growth rate since February 2012.
The U.S. trade deficit increased from $54.04 billion in July to $54.90 billion in August. In non-seasonally adjusted data, U.S.-manufactured goods exports have fallen 2.49 percent through the first eight months of 2019 relative to the same period in 2018. This suggests that international demand for U.S.-manufactured goods has weakened in the first half of this year after experiencing better data in both 2017 and 2018.
The World Trade Organization sees merchandise trade volume rising just 1.2 percent in 2019, down from 3.0 percent in 2018. It had predicted 2.6 percent growth this year in April, with “escalating trade tensions and a slowing global economy” providing downside risks.
The U.S. dollar has appreciated nearly 10 percent against major currencies since Jan. 25, 2018, according to the Federal Reserve. This was the strongest the dollar has been since June 2017.
With Congress back next week, manufacturers are gearing up to press for passage of the U.S.-Mexico-Canada Agreement and a long-term and robust reauthorization of the U.S. Export-Import Bank as quickly as possible. In addition, manufacturers are following numerous other trade issues, including through: