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(What’s Left of) Our Economy: U.S. Manufacturing Remains Stuck in Pandemic Aftermath Mode

24 Tuesday Jan 2023

Posted by Alan Tonelson in (What's Left of) Our Economy

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CCP Virus, coronavirus, COVID 19, durable goods, global financial crisis, Great Recession, manufacturing, nondurable goods, recession, {What's Left of) Our Economy

‘Tis still the season – and it will continue for a while to be the season – for year-end 2022 economic data, and today we’ll examine the list of the production growth winners and losers in domestic manufacturing. The big takeaway is that U.S.-based industry’s output patterns are still being shaped by the fading but ongoing aftermath of the CCP Virus pandemic. The main evidence? The unusual  fluctuations in manufacturing ouput.

But before getting to the results from the twenty widest manufacturing categories tracked by the Federal Reserve, let’s review the even bigger picture results, which provide an indication of the dramatic ups and downs experienced recently by industry.

Manufacturing’s overall production last year dipped by 0.41 percent after adjusting for inflation (the measure most closely followed by students of the economy). So by the standard definitions (two straight quarters of contraction) the sector is in recession. Moreover, excepting the peak pandemic year of 2019-20, this latest annual output showing was U.S.-based manufacturers’ weakest since the 2.43 percent yearly drop in 2019.

At the same time, this decrease followed 2021’s 4.19 percent gain in constant dollar manufacturing production – the best such showing since the 6.48 percent registered in 2010, early during the recovery from the Great Recession triggered by the Global Financial Crisis of 2007-08.

Narrowing the focus slightly, production in the durable goods super-category climbed between 2021 and 2022 by 0.85 percent. But that relatively feeble expansion came right after the 4.79 percent price-adjusted growth the previous year – its best such performance since 2011’s 5.96 percent.

In nondurable goods,after-inflation production sank last year by 1.72 percent. But the previous year’s 3.58 percent expansion was the strongest since the 3.89 percent way back in 2004.

Big fluctuations can be seen in the statistics for the aforementioned “Big 20.” In the left-hand column below is how their constant dollar output grew or shrank last year in percentage terms, listed from best to worst. In the right-hand column are the counterpart numbers for 2021, in the same order.

1. aerospace & misc, transportation:  10.87    petroleum and coal products:   13.99

2. apparel and leather goods:              10.11   machinery:                                 11.98

3. nonmetallic mineral product:            5.69  computer & electronic product:  9.20 

4. automotive:                                       5.05 miscellaneous durable goods:      6.38

5. fabricated metal product:                  1.75  chemicals:                                   6.37

6. miscellaneous durable goods:           1.60  primary metals:                          5.87  

7. food, beverage and tobaco:                0.11  fabricated metal product:          5.84 

8. elec equip, appliances:                      -0.44 aerospace,misc transportation:  5.39

9. plastic and rubber products              -1.07 elec equip., appliances:              5.35

10.printing                                            -1.19 textiles & products:                   4.56

11. chemicals:                                       -2.01 furniture:                                   4.11

12. petroleum & coal products:            -2.33 apparel & leather goods:           4.11

13. primary metals:                               -2.83 printing:                                    3.26

14. machinery:                                      -2.89 plastics & rubber products:      1.99

15. computer & electronic product:      -2.91 paper:                                       0.90 

16. misc.nondurable goods:                 -3.56 wood product:                           0.13

17. furniture:                                        -5.19 nonmetallic mineral product:   -0.17  

18. wood product:                                -6.14 food, beverage & tobacco:       -0.35 

19. paper:                                             -8.23 automotive:                              -4.29    

20. textiles & products:                     -11.98 misc nondurable goods            -6.00

The weakness of 2022 comes through from noting that of these twenty industries, inflation-adjusted production fell in fully 13.  In 2021, such losers nubeed only five.

As for the fluctuations, in 2022, the after-inflation growth for five of the twenty were the worst since the Great Recession years of 2008 and 2009:  wood product, computer and electronic product, furniture, textiles and products, and paper. And for the latter two, that “worst since the Great Recession” description includes their results for the terrible peak pandemic year 2020. In 2021, no sectors achieved that dubious distinction.     

But in 2021, five sectors recorded their best annual price-adjusted production increases since 2010 – the first full year of recovery after the Great Recession:  primary metal, fabricated metal product, machinery, computer and electronic product, and electrical equipment and appliances.   

From the perspective of today, domestic manufacturing looks like it’s been on a roller-coaster, with 2021 being a sizable leg up followed by a small leg down last year. The big question facing U.S.-based manufacturing (assuming no more pandemics or new conflicts breaking out in Europe or Asia or or other black swan events) is how deep a dive that leg down will become if the broader economy slows meaningfully or falls into a new recession – as domestic industry already has.     

                                                       

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(What’s Left of) Our Economy: Still More Evidence of Weakening U.S. Manufacturing

20 Friday Jan 2023

Posted by Alan Tonelson in (What's Left of) Our Economy

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capacity utilization, durable goods, manufacturing, nondurable goods, {What's Left of) Our Economy

On top of lousy new job and output results, we can now make it a discouraging trifecta for U.S. domestic manufacturing: The new output figures released by the Federal Reserve Wednesday also show that capacity utilization keeps falling, too.

This is a statistic I haven’t followed for a while, but many students of the economy see capacity utilzation as a key barometer of industry’s health, and when you consider the definition, it’s easy to see why. Capacity utilization measures the share of the nation’s factory equipment that’s actually in use, and not sitting idle. So it says lots about what kind of demand manufacturers are seeing for their goods.

Therefore, it can’t possibly be good news that for manufacturing overall, capacity utilization fell to 77.53 percent – the lowest such figure since September, 2021’s 77.14 percent.

Moreover, capacity utilization is down from its post-pandemic peak of 80.10 percent last April. And it’s back below its historic average between 1972 and 2021 of 78.20 percent. Moreover, the monthly sequential drop of 1.39 percent was one of several recent manufacturing results that have hit their worst since the peak of the CCP Virus’ devastating first wave, in April, 2020. In that case, capacity utilization cratered by 15.31 percent sequentially.

As far as the super categories are concerned, utilization in durable goods was down monthly in December by 1.21percent to 76.10 percent – also the lowest figure since September, 2021 (which was 74.84 percent). In addition, this gauge of durable goods activity has dropped by 3.32 percent since last peaking (also in April) at 78.72 percent

Non-durable goods’ capacity utilization rate in December rate was higher in absolute terms (79.20 percent) than that for either manufacturing generally or durable goods. But it tumbled from November’s read by a steeper 1.58 percent. Since its peak last March, it’s decreased by 3.27 percent.

These December results are still preliminary. And optimists can note that capacity utilization in all three categories is still slightly higher than in February, 2020, the last full data month before the pandemic’s arrival in the United States in force.

But the recent trend is unmistakably gloomy, and entirely consistent with the likelihood that, like the entire economy, domestic manufacturing is in for some tough sledding over the next few months.

(What’s Left of) Our Economy: Today’s Really Recession-y U.S. Manufacturing Production Report

18 Wednesday Jan 2023

Posted by Alan Tonelson in (What's Left of) Our Economy

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aircraft, aircraft parts, Federal Reserve, machinery, manufacturing, medical devices, medical equipment, miscellaneous transportation equipment, nonmetallic mineral products, output, petroleum and coal products, pharmaceuticals, primary metals, printing, production, real output, recession, semiconductors, soft landing, {What's Left of) Our Economy

A U.S. recession is either imminent or already here – that’s the main message being strongly suggested by today’s release by the Federal Reserve on inflation-adjusted manufacturing production (for December).

Not only did industry’s real output sink by 1.30 percent sequentially – the worst such result since February, 2021’s 3.64 percent weather-affected plunge. But November’s initially reported 0.62 percent retreat was revised down to one of 1.10 percent.

Two straight monthly drops of one percent or more each haven’t been recorded by U.S.-based manufacturers since the February through April, 2020 period – when the arrival of the CCP Virus began roiling American life and the national economy, and indeed threw the latter into a deep downturn.

The new figures pushed price-adjusted U.S. manufacturing production into contraction for full-year 2022 – by 0.41 percent. That’s a major deterioration from the 4.19 percent constant dollar gain in 2021 – the strongest such showing since the 6.48 percent achieved in 2010, during the recovery from the Global Financial Crisis and ensuing Great Recession.

Moreover, since just before the pandemic arrived in force in the United States (February, 2020), after-inflation manufactuing has now grown by just 1.21 percent. As of last month’s industrial production release, this figure stood at 3.07 percent.

Of the twenty broadest manufacturing sub-sectors tracked by the Fed, only three boosted monthly inflation-adjusted production in December: aeropace and miscellaneous transportation equipment (0.96 percent), primary metals (0.84 percent), and nononmetallic mineral products (0.65 percent).

The biggest losers among their 17 other counterparts were machinery and printing and related support activities (3.37 percent each), and petroleum and coal products (3.13 percent).

Especially concerning, and continuing a pattern identified last month – for machinery and printing, these results were the worst since April, 2020, at the peak of the CCP Virus’ devastating first wave, when their real output collapsed month-to-month by 18.64 percent and 23.10 percent, respectively. Meanwhile, the monthly decrease in petroleum and coal products was its biggest since weather-affected February, 2021.

And as known by RealityChek regulars, machinery’s tumble last month is a particularly bright red flag. Because its products are used so widely in sectors inside and outside of manufacturing – including by growing companies or firms counting on continued or faster growth – its fortunes are seen as a good predictor of the economy’s future. Therefore, a big machinery production decrease (the second in a row) could well mean that business activity across the national board is at least slowing markedly and won’t be reviving any time soon.

The December numbers were only somewhat better for sectors of special interest since the CCP Virus’ arrival stateside. Sequential increases were registered in pharmaceuticals and medicine (by 1.10 percent) and aircraft and parts (by 1.49 percent). But price-adjusted output fell in automotive (by 1.03 percent), the shortage-plagued semiconductor industry (by 1.20 percent), and the medical equipment and supplies sector that encompasses products heavily used to fight the pandemic (by 2.50 percent).

In addition, the slippage in medical equipment and supplies was one of those that was the greatest since the peak of the CCP Virus’ first wave (when it nosedived by 17.76 percent).

Since manufacturing is only about fifteen or sixteen percent of the total U.S. economy (depending on how you count output), a downturn in industry doesn’t necessarily presage an overall recession. But the new industrial production statistics aren’t the only signs of shrinkage. Consumer spending comprises nearly 71 percent of the economy according to the latest (third quarter, 2021) data, and today’s advance official retail sales report (for December) indicates that they’ve now fallen consecutively for two months. Possibly weaker inflation (indicated most recently by today’s wholesale price report, which I’ll post about tomorrow), also signals gloomy times ahead.

Since the new Fed manufacturing production results will be revised several times over the next few months, it’s possible that the real picture in industry could brighten somewhat. But likelier, in my view (as I wrote yesterday), is for a recession-averse Washington to move to stimulate consumer spending without seeking similar results for production – in other words, a time-tested formula for stagflation at best for the foreseeable future.

P.S. As alert readers may have noticed, this post contains many fewer manufacturing production details than its recent predecessors. My aim is to ensure that I can get this info to you on a same-day basis. Do you like this simpler format better? Or should I return to going deeper into the weeds? Please let me know if you get a chance.         

        

(What’s Left of) Our Economy: 2022’s U.S. Manufacturing Employment Winners and Losers

09 Monday Jan 2023

Posted by Alan Tonelson in (What's Left of) Our Economy

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automotive, durable goods, Employment, Federal Reserve, inflation, Jobs, manufacturing, nondurable goods, nonfarm jobs, private sector, recession, soft landing, {What's Left of) Our Economy

The release last Friday of the December official U.S. jobs report enables students of the economy to examine developments over the last full year, and that includes the biggest employment winners and losers in domestic manufacturing.  (Here‘s my analysis on the latest monthly manufacturing jobs data.) 

Below are the results for the broadest manufacturing categories tracked by the government, along with the durable and nondurable goods super-categories, both in absolute terms and in relative (percentage) terms. Because its fortunes have so strongly influenced those of all domestic industry, the data for the narower automotive sector will be presented as well.

(As known by RealityChek regulars, the numbers for other narrower sectors of special importance since the CCP Virus arrived stateside in force, like certain medical equipment and pharmaceuticals and semiconductors, are always one month behind. So year-on-year changes for full year 2022 won’t be available until next month.)

As with all U.S. government data, the figures below will be revised several times more. But unless the upgrades and downgrades are enormous, the year will have been marked by several important trends and comparisons with the 2021 data. In particular:

>manufacturing employment from December, 2021 through December, 2022 grew by exactly the same percent (3.02) as employment in the non-farm economy as a whole – the government’s definition of the entire economy;

>between December, 2020 and December, 2021, manufacturing job creation trailed hiring in the non-farm economy by 4.73 percent to 2.99 percent;

>between December, 2021 and December, 2022, head counts in the private sector as a whole expanded by 3.31 percent – also faster than manufacturing’s pace – but that result represented a smaller margin versus manufacturing than in 2021, when private sector payrolls expanded by 5.21 percent;

>in 2022, payrolls increased faster in durable goods (3.29 percent) than in nondurable goods (2.57 percent);

>in 2021, the durable goods edge was a smaller 3.11 percent versus 2.80 percent; 

>on a percentage basis, 2022 manufacturing job growth was broad-based. Of the 20 broad industry groupings tracked by the federal government, 15 generated additional hires and ten boosted their workforces by between two and four percent; and

>2021’s manufacturing employment increases were even broader based, however, as only the petroleum and coal products sector cut jobs.  But the spread among sectors was greater, as only eight fell into the two-four percent growth range.   

And now, the absolute yearly changes in manufacturing employment in 2022 and 2021, with the former listed in order from best performance to worst:

                                                                       2022                    2021

manufacturing total                                     379,000               365,000

durable goods                                              257,000               236,000

nondurable goods                                        122,000               129,000

transportation equipment                               90,800                 50,400

food manufacturing                                       59,100                  29,200

fabricated metal products                              43,900                  46,000

machinery                                                      41,000                  27,500

chemicals                                                       31,000                  26,300

computer & electronics products                   30,200                  14,600

miscellaneous nondurable goods                   18,400                  40,300

plastics & rubber products                             16,700                  20,100

miscellaneous durable goods                         15,600                  31,700

wood products                                                12,000                  16,900

non-metallic mineral products                       14,200                    3,300

primary metals                                                 9,900                  11,600

electrical equipment & appliances                   7,500                 17,500

paper & paper products                                    5,200                      800

printing & related support activities                   300                   7,000

apparel                                                               -300                   2,100

petroleum & coal products                             -1,600                  -4,400

textile mills                                                     -3,400                   3,900

textile product mills                                        -3,500                   4,000

furniture & related products                            -8,000                15,600

20-21 absolute changes

And here are those percentage changes, with the 2022 results again listed from best performance to worst:

                                                                           2022                   2021

manufacturing total                                            3.02                    2.99

durable goods                                                     3.29                    3.11

nondurable goods                                               2.57                    2.80

transportation equipment                                   5.43                     3.11

miscellaneous nondurable goods                       5.42                  13.46

machinery                                                          3.84                    2.64

food manufacturing                                           3.56 `                  1.79

chemicals                                                           3.53                    3.09

non-metallic mineral products                           3.48                    0.81

fabricated metal products                                   3.11                   3.37

wood products                                                    2.87                   4.21

computer & electronics products                       2.83                   1.39

primary metals                                                   2.78                   3.36

miscellaneous durable goods                             2.49                   5.33

plastics & rubber products                                 2.21                   2.82

electrical equipment & appliances                     1.86                   4.55

paper & paper products                                      1.48                   0.23

printing & related support activities                   0.08                   1.91

apparel                                                               -0.32                   2.28

petroleum & coal products                                -1.52                  -4.01

furniture & related products                              -2.09                   4.24

textile product mills                                           -3.32                   3.94

textile mills                                                        -3.39                   4.05

As for the automotive sector, which is placed within the broader transportation equipment category, it added 54,200 workers in 2022, a 5.50 percent advance. So among the above industries, on a percentage basis, it takes the job creation crown for industry during the past year.  Vehicle and parts makers enjoyed a strong 2021 employment-wise, too, enlarging their workforce by 4.05 percent, or 38,300.

A final noteworthy point: Manufacturing’s hiring performance doesn’t seem to have been strongly related to its production growth. In 2021, when industry’s payrolls expanded by 2.99 percent, its inflation adjusted output rose by 4.19 percent. But last year, when manufacturers upped their headcounts by 3.02 percent, their real production annual growth (through November – the lastest data available) slowed to 1.40 percent.

This year, the economy could well tip into recession, or perhaps at best achieve the “soft landing” sought by the Federal Reserve in its fight against inflation. In other words, U.S.-based manufacturers could well face a new test of the growth and hiring resilience they’ve shown so far since the pandemic’s arrival.            

(What’s Left of) Our Economy: Manufacturing Job Creation Downshifts Further

07 Saturday Jan 2023

Posted by Alan Tonelson in (What's Left of) Our Economy

≈ 2 Comments

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aerospace, aircraft, aircraft engines, aircraft parts, automotive, CCP Virus, chemicals, coronavirus, COVID 19, Employment, fabricated metal products, food products, furniture, Jobs, machinery, manufacturing, non-metallic mineral products, petroleum and coal products, pharmaceuticals, semiconductors, surgical equipment, transportation equipment, vaccines, {What's Left of) Our Economy

No doubt about it now – at least for now. As yesterday’s official U.S. employment data (for December) confirm, domestic manufacturing is experiencing a pronounced job-creation slowdown.

Of course, these latest figures, as well as November’s, are still preliminary. But it would take mammoth revisions to change this narrative. U.S.-based manufacturers upped their payrolls by only 8,000 on month in December. On top of the same (downwardly revised) November employee increase, those last two data months have each seen industry’s weakest job gains since the 28,000 loss suffered in April, 2021. And the new October and November figures are downgrades, too.

Another perspective: During the first half of this year, manufacturing employment rose by an average of 39,830. So far, during the second half of the year, this monthly average is down to 23,330.

Moreover, the unimpressive recent results have placed the private sector overall ahead of manufacturing as an employment generator during the post-CCP Virus period. Since February, 2020 – the last full data month before the pandemic began hammering and roiling the economy – the former’s head counts are up 1.29 percent versus 1.17 percent for manufacturing. Last month, manufacturing held the lead by 1.17 percent to 1.16 percent. (Government payrolls at all levels are still down by 1.91 percent during this stretch.

Consequently, manufacturing’s share of total U.S. private sector jobs slipped for the second straight month – from 9.86 percent to 9.85 percent. But industry’s strong two years of hiring mean that this percentage is still higher than the immediate pre-CCP Virus level of 9.83 percent. And the December results still left the manufacturing workforce at its highest level (12.934 million) since November, 2008’s 13.034 million.

Nonetheless, the December jobs report was by no means devoid of bright spots, as the rundown that follows will show that several major industries created gobs of jobs during the month.

December’s biggest manufacturing jobs winners among the broadest sub-sectors tracked by the U.S. Labor Department were:

>transportation equipment, a big, diverse grouping boosted employment by 15,200 in December – its best such performance since August’s 20,900. Revisions were mixed, with November’s initially reported 6,100 advance downgraded to one of 4,500; October’s initially reported 4,700 increased revised way up to 13,200, and then again to 14,500; and September’s original 8,400 increase downgraded to 4,700 but then revised up to settle at 6,300.

Employment in transportation equipment is now 1.94 percent higher than in the last full pre-CCP Virus data month of February, 2020, versus the 1.08 percent calculable last month;

>non-metallic mineral products, where payrolls improved by 4,500 in December in the best monthly performance since December, 2020’s 5,200. Revisions were mixed here, too. November’s initially reported 1,800 gain is now recorded as a loss of 800; October’s results have gone from an increase of 3,200 to one of 2,900 and back to 3,000; and September’s initially reported 1,500 job loss was revised up to a dip of just 200 before settling at a decrease of 300.

The non-metallic mineral products workforce has now expanded by 0.57 percent since immediately pre-pandemic-y February, 2020, versus the 0.01 percent calculable last month.

>machinery, a bellwether for the entire economy, since its products are so widely used in both manufacturing and non-manufacturing sectors, enjoyed job growth of 3,300 in December. Revisions were positive overall. November’s advance of 3,900 was revised up to one of 4,200 – its best monthly increase since April’s 5,800. October’s initially reported 3,000 increase was upgraded to 3,600 but then revised back down to the original 3,000. But September’s initially reported 1,700 decrease (then the sector’s worst such total since November, 2021’s 7,000 plunge) was upgraded to a decline of just 300, where it finally settled.

This performance moved machinery’s head count to within 0.28 percent of its February, 2020 level, versus the 0.55 gap percent calculable last month;

>food manufacturing, another big industry, which saw employment rise by 3,300 in December. Revisions were overall positive. November’s initially reported 3,400 increase is now judged to have been 4,200. October’s initially reported 1,000 rise was downgraded to 500, but then revised back up to 900. And although September’s initially reported 7,800 job growth was ultimately revised down to 7,600, it was still the sector’s best such performance since February’s 11,100.

The food manufacturing workforce has now expanded by 3.80 percent since just before the pandemic’s arrival in force, versus the 3.52 percent calculable last month; and`

>fabricated metal products, another sizable sector, upped employment by 2,900 in December, and revisions were mixed. November’s net new hires were revised down from 1,300 to 500. October’s results were at first downgraded from a 5,200 increase to one of 5,000, but then revised up to 6,600 (the strongest such number since April’s identical increase. But September’s initially reported advance of 6,300 has been downgraded significantly, to 5,500 and then finally to 2,300.

Job levels in fabricated metal products is now off by 0.93 percent since February, 2020, versus a 1.18 percent shortfall calculable last month.

The biggest December jobs losers among the broadest manufacturing categories were:

>chemicals, a big category whose 5,700 employment contraction in December was its first drop since August, 2021 and by far the worst since the 20,000 nosedive of April, 2020, when the devastating effects of the CCP Virus’ first wave were peaking. Revisions, moreover, were negative on net. November’s initially reported 4,700 head count climb (then chemicals’ best result since May’s 5,100 improvement) to 3,600. After having been upgraded from 1,600 to 2,200, October’s rise was revised down to 1,700. But September’s initially reported 3,400 increase was downgraded to one of 2,700 before being upgraded again to its final level of 3,200.

The chemicals workforce is now 6.47 percent greater than in immediately pre-pandemic-y February, 2020 – down from the 7.32 percent increase calculable last month;

>petroleum and coal products, a sector whose payrolls weakened by 3,300 in December – its worst such performance since the 3,500 jobs lost in winter weather-affected January, 2021. Revisions were mixed, though. November’s initially reported 900 jobs added now stands at 1,100 (the best such increase since February’s 2,000). October’s results bounced up from an initially reported employment dip of 100 to a gain of 200 and back to a 100 loss. And September’s initially reported head count advance of 300 has stayed upgaded to 400 for three months.

But the December fall-off dragged petroleum and coal products employment down to 8.31 percent below its level just before the pandemic’s arrival in force, versus the 5.31 percent gap calculable last month;

>furniture and related products, whose 2,900 employment decrease was its worst since the 73,900 catastrophe suffered in April, 2020 – during the height of the pandemic’s first wave. Revisions, moreover, were significantly negative – no surprise given the recent woes of the nation’s housing sector. November’s initially reported slump of 1,500 is now estimated at 1,900. October’s results have deteriorated from a slip of 200 to one of 400. And September’s initially reported 300 decrease now stands at one of 600.

These employment setbacks have pushed the furniture industry’s workforce down to 2.31 percent below its February, 2020 levels, versus the 1.33 percent calculable last month; and

>miscellaneous nondurable goods, which also reduced its payrolls by 2,900 in December, and whose revisions were negative on net. November’s initially reported jobs gain of 1,200 is now pegged as a retreat of 3,300 – these companies’ worst such performance since they cut 9,400 positions in December, 2020. After October’s gain of 2,100 was upgraded to one of 3,300, it was lowered to 2,700 – which at least was still the best such performance since June’s 5,400. But September’s results have been revised up from 1,300 net new hires to 2,000 and have settled at 2,300.

This diverse group of industries’ have now enlarged their workforce by 9,68 percent since immediately pre-pandemic-y February, 2020, versus the 12.13 percent calculable last month.

As known by RealityChek regulars, throughout the CCP Virus period, the automotive industry’s employment gyrations have influenced manufacturing’s overall hiring, and in December, as with other sectors examined above, its robust job creation helped keep industry’s monthly total in the black.

Indeed, U.S.-based vehicle and parts makers added 7,400 workers on month, and revisions were positive. November’s initially reported increase of 1,900 was revised up to 2,300 – though this result was still these industries’ weakest since they shed 7,400 employees in May. But October’s initially reported rise of 4,800 has been upgraded twice – to 7,500 and then to 9,000. And September’s results have been revised from 8,300 to 7,400 and then bsck up to 9,000 – where they’ve remained.

All told, automotive’s jobs numbers are now 5.11 percent higher than in February, 2020, versus the 4.17 percent calculable last month.

RealityChek has also been following several other industries of specical interest during the pandemic era whose results are always a month behind those of the above categories. And on the whole, they expanded job creation modestly in November.

In the semiconductor sector, whose shortages have handicapped so many other industries, and which will now benefit from massive government subdidies aimed at reviving domestic production, head counts rose by 1,200, and revisions were mixed. October’s initially reported increase of 2,300 was downgraded to one of 2,200 – a total that was still the best since June, 2020’s 3,000, during the recovery from the first CCP Virus wave. But September’s figures remained donwardly revised from an initially reported gain of 800 to a loss of 1,000.

The semiconductor workforce is now 6.60 percent larger than in immediately pre-pandemic-y February, 2020, versus the 6.01 percent calculable last month.

Aerospace manufacturers were especially hard hit by the CCP Virus-era travel bans and by individuals’ reluctance to fly. But with normalization returning, these companies’ revived hiring continued on balance in November.

Aircraft makers enlarged their workforce by 300 – a performance that was actually their weakest since they cut 800 positions in January. Revisions were slightly negative, however, with October’s initially reported 3,900 revised down to 3,800 – still the sector’s best such performance since June, 2021’s 4,400 jump. And September’s initially reported advance of 1,300 stayed at a downwardly revised 1,200.

As a result, aircraft employment crept to within 5.77 percent of its immediate pre-pandemic level, versus the 5.85 percent calculable last month.

In aircraft engines- and engine parts-makers, payrolls grew by 500, and revisions were positive. October’s initially reported improvement of 700 was upgraded to one of 800, and September’s 100 job loss has remained unrevised. Employment in these industries has now contracted by 7.42 percent since February, 2020, versus the 8.83 percent calculable last month.

The exceptions to this pattern of stronger November hiring were the non-engine aircraft parts- and equipment sectors. They cut payrolls by 400 in November, and revisions were slightly negative. October’s initially reported gain of 100 was revised down to no change, and Smbeepter’s contraction stayed at 700 after having been downgraded from a loss of 500. These results left employment among these companies off by 14.45 percent during the CCP Virus era, versus the 14.36 percent calculable last month.

The healthcare manufacturers that have occupied the spotlight since the pandemic began generally added jobs in November, too. But the surgical appliances and supplies makers that turn out so many of the products used to fight the CCP Virus weren’t among them.

These companies shrank their workfoce by 800 in November in their weakest performance since identical cuts in June, and revisions were negative on balance. October’s initially reported hiring flatline was revised up to an increase of 600 – their best employment month since they added 900 positions in August. But September’s results have been downgraded to a decline of 300 after having been revised up from an advance of 1,000 to one of 1,200.

These ups and downs left this sector’s workforce just 4.83 percent larger than in immediately pre-pandemic-y February, 2020 –much lower than the 11.64 percent growth calculable last month.

By contrast, the big pharmaceuticals and medicines category boosted employment by 2,200 in November – its best such performance since June’s 4,000. Revisions were positive, too. October’s initially reported increase of 600 (which I erroneously reported last month as a flatline) was downgraded to 500, but September’s advances have been revised up from 200 to 500 to 1,200.

During the CCP Virus era, this sector has upped employment by 12.51 percent, versus the 11.64 percent calculable last month.

Finally, the medicines subsector containing vaccines hired 700 net new workers in November, but revisions were mixed. October’s initially reported gain of 600 was upgraded to one of 900 – the best improvement since the identical addition in June. But September’s results have been revised down from a rise of 500 to one of 300 after having been initially reported as a 200 increase.

Still, employment in this vaccines-centric grouping is now 27.31 percent higher than just before the pandemic hit the United States in force, versus the 26.29 percent calculable last month.

The substantial hiring increases in major industries like automotive and fabricated metals products make it difficult to forecast a significant downturn in manufacturing job creation during the next few months. And the strong job creation in machinery is especially encouraging, since it seems to indicate that companies throughout industry and the rest of the economy are ordering its products in anticipation of continued solid demand from their customers.

At the same time, the chemicals sector also provides inputs for many other industries, and its December job cuts could presage, at a minimum, a softening of activity in manufacturing and beyond. And since it began acknowledging inflation’s seriousness, the Federal Reserve seems as determined as ever to achieve such softening in order bring prices under control.

Right now, the safest bet seems to be that manufacturing job creation stays subdued, and even loses more momentum.

(What’s Left of) Our Economy: What a U-Turn for the U.S. Trade Deficit!

05 Thursday Jan 2023

Posted by Alan Tonelson in (What's Left of) Our Economy

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CCP Virus, China, coronavirus, expansion, exports, Federal Reserve, GDP, goods trade, gross domestic product, imports, inflation, manufacturing, non-oil goods trade deficit, pandemic, recession, services trade, supply chains, Trade, trade deficit, {What's Left of) Our Economy

As this morning’s stunning official U.S. international trade figures (for November) made clear, the CCP Virus pandemic really wasn’t over yet near the end of last year – at least when it came to China. The steep monthly drop in the November overall trade gap stemmed largely from the Chinese dictatorship’s erratic response to a new tidal wave of virus cases. Beijing at first ordered a series of new shutdowns in numerous major cities, and then abruptly tried reversing course following widespread protests from an outraged and pandemic-and lockdown-exhausted Chinese citizenry.

The resulting turmoil and confusion depressed the Chinese economy – including the export-focused sectors that had led the country to serve as the “world’s factory.”

At the same time, the renewed disruption of China-centric global supply chains only accounted for a little less than half of the November U.S. trade balance’s sequential improvement. And at least as strikingly, the combined goods and services shortfall cratered even though by most accounts the U.S. economy’s growth accelerated late last year. More surprising still, growth appears to have sped up in November – and during the rest of the quarter – even as imports fell off the table.

As known by RealityChek regulars, it’s been rare for the deficit to tumble when the gross domestic product (GDP – the standard measure of the economy’s size) increases, and largely because American expansion typically means that both U.S. consumers and businesses are stepping up their historically robust importing. Much more common are deficit drops mainly due to the economy sagging and this importing tailing off.

As the U.S. recession during the first half of last year came to an end, America’s trade performance racked up a short winning streak during which the trade gap shrank and – even better – exports increased and imports decreased. That’s “even better” because an economy that’s importing less and exporting more is one that’s growing less because of borrowing and spending and more because of producing.  Early in the third quarter, though, the return of growth seemed to start reproducing the standard pattern during which rising imports boosted the deficit.

November’s results sharply reversed that latest trend – to put it mildy. The overall deficit sank month-to-month in November by a whopping 20.93 percent. That’s the biggest fall-off since February, 2009’s (26.85 percent), when the economy was still mired in the Great Recession triggered by the Global Financial Crisis of 2007-08. And the $61.51 billion level (down from October’s $77.85 billion) is the lowest monthly figure since the $59.11 billion in September, 2020, when the economy was recovering from the first CCP Virus wave.

Total exports were off sequentially in November, but only by two percent, from $256.996 billion to $251.864 billion. That was the third straight decline, the biggest since January’s 2.01 percent, and the lowest monthly figure since April’s $244.230 billion. But given the sluggishness of the rest of the global economy, and the unusually level of the U.S. dollar then (which undermines the price competitiveness of U.S.-origin goods and services at home and abroad), this decrease seems pretty modest.

The bigger move by far was in total imports, which plunged by 6.41 percent, from $334.843 billion to $313.374 billion. The decrease was the biggest in percentage terms since the 13.16 percent nosedive of April, 2020, when the pandemic and its economic effects were at their worst in the United States.

The China effect was certainly a huge contributor. The U.S. goods gap with the People’s Republic (country-specific services data take much longer to release) slumped by fully 26.23 percent, from $28.87 billion to $21.30 billion. This $7.57 billion difference represented 46.33 percent of the $16.34 billion monthly improvement in the total trade deficit in November. For good measure, the sequential plunge was the greatest since the 38.93 percent nosedive of February, 2020 (when China was still struggling with the first virus outbreak), and the monthly total the lowest since April, 2020’s $22.30 billion.

And goods imports from China fell sequentially in November by $7.70 billion, from $44.57 billion to $36.88 billion. That decrease of 17.27 percent was steepest since the 31.47 percent collapse in February, 2020, and the monthly total the most modest since March, 2020’s $19.64 billion.

But as a result, more than half of the spectacular monthly drop in the November combined goods and services deficit came from other trade flows, as did 64.13 percent of the month’s total import decline of $21.47 billion.

More evidence that the monthly trade shortfall’s decrease was spurred by much more than China’s troubles: The U.S..global non-oil goods trade gap, the closest proxy to U.S.-China goods trade, was off by $15.21 billion on a monthly basis in November (more than twice the amount of the $7.57 billion decline in the U.S.-China deficit). And non-oil goods imports tumbled by $19.87 billion month-to-month in November – some two and a half times the amount of the $7.70 billion drop in goods imports from China.

In other noteworthy November trade developments, the U.S. goods deficit drooped by 15.44 percent on month, from $99.40 billion to $84.05 billion. That figure is the lowest since December, 2020’s $83.20 billion and the decrease the biggest relatively speaking since the 20.79 percent in Great Recession-y February, 2009.

The long-time surplus in services, the biggest sector of the U.S. economy, and a cluster of industries hit especially hard by the pandemic and its resulting economic damage, rose 4.60 percent, from $21.55 billion to $22.54 billion.  That monthly total was the highest since February, 2021’s $23 billion.

The November slippage in goods exports of 3.03 percent, from $176.16 billion to $170.82 billion, was the largest in percentage terms since the 3.34 percent of September, 2021.

Goods imports dropped 7.51 percent, from $275.56 billion to $254.87 billion. That total was the lowest since October, 2021’s $243.85 billion and the percentage decline the greatest since the 12.79 percent in pandemic-y April, 2020.

Services exports inched up by just 0.26 percent sequentially in November, but the $81.05 billion total was the eighth straight record, and the monthly advance the tenth in a row.

The huge, chronic trade deficit in manufacturing sank from $134.73 billion in October to $115.72 billion, with that November level the best since February’s $106.49 billion – when the last economic downturn had begun. And the sequential retreat of 14.11 percent was the greatest since the 23.09 percent in Great Recession-y February, 2020.

Manufacturing exports were down 4.71 percent on month, from $110.44 billion to $105.24 billion, and manufacturing imports plummeted by 9.88 percent, from October’s $245.17 million (the second worst monthly total ever, behind March’s $256.18 billion), to $220.95 billion.

On a year-to-date basis, however, the manufacturing deficit of $1.3902 trillion has already passed last year’s annual record of $1.3298 trillion, and is running 15.49 percent ahead of the 2021 pace.

Even by CCP Virus-era standards, the November U-turn taken by the trade deficit has rendered the U.S. economic outlook awfully fuzzy. Economists seem pretty confident that the economy is headed for a recession soon, but the latest prominent forecast shows that growth heated up notably between last year’s third and fourth quarters. So if a downturn really is imminent, it’s going to come incredibly abruptly.

That should improve the trade deficit further. But what if the Federal Reserve chickens out and decides to halt or just pause its strategy of cooling inflation by slowing growth significantly because…it becomes clear that the tightening it’s already pursued has begun slowing growth? What if all the money Washington has put into consumers’ pockets continues to fuel robust spending – which tends to pull in more deficit-widening imports? But if so, how come growth has been so much better in the second half of the year even as Americans’ purchases from abroad now look like they’re tanking?

And will China finally get control over the pandemic, and return its economy to some semblance of normalcy?

The answers to those questions seem to be way above any mortal’s pay grade.  And although I’m in the “recession’s coming” camp, so far, the economy doesn’t seem to care.  As a result, I’ll be following the incoming trade and other economic data unusually closely – and with unusual humility.      

(What’s Left of) Our Economy: New Official Manufacturing Output Figures Add to Recessionary Gloom

16 Friday Dec 2022

Posted by Alan Tonelson in Uncategorized

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aerospace, aircraft, aircraft parts, appliances, automotive, computer and electronics products, electrical components, electrical equipment, Federal Reserve, furniture, inflation-adjusted growth, machinery, manufacturing, medical supplies, pharmaceuticals, plastics and rubber products, printing, real growth, semiconductors, transportation equipment, wood products, {What's Left of) Our Economy

Yesterday’s Federal Reserve report on U.S. manufacturing production (taking the story through November) tells me that domestic industry’s inflation-adjusted output is rolling over into contraction – and not just because it fell last month for the first time since June. As I’ll spotlight below, it was also disturbing to see multi-month worsts in industries where such output has been remarkably stable lately, and sequential drops in some other sectors that were the biggest since the peak of the CCP Virus pandemic’s hit to the economy in April, 2020.

Production in real terms by U.S.-based manufacturers sagged by 0.62 percent sequentially last month – the first negative read since June’s 0.73 percent drop. Oddly, though, revisions of recent months’ results were slightly to the upside, although hardly stellar.

Still, as a result, since February, 2020, just before the pandemic struck the U.S. economy in force, such manufacturing production is up by 3.07 percent, versus the 3.76 percent calculable last month.

November’s manufacturing output losses were so broad-based that only four of the twenty broad industrial subsectors tracked by the Fed registered any sequential growth at all. They were:

>wood products, which grew by 3.59 percent in price-adjusted terms despite the continuing troubles of the housing industry. Indeed, that was the best such result since March, 2021’s 3.71 percent. But the November increase came after an October decrease of a downwardly revised 3.58 percent that was wood products’ worst month since constant dollar production plunged by 11.02 percent in April, 2020. wave. Other revisions were overall negative, too, but the November pop means that after-inflation wood products output is now up by 0.20 percent since immediately pre-pandemic-y February, 2020, versus being 2.67 percent below calculable last month:

>printing and related support activities, which enjoyed its second straight sequential real output improvement after difficult summer and fall. The sector’s 1.58 percent advance in November followed one of an upwardly revised 2.75 percent in October that was the best such figure since February’s 3.13 percent jump. Other revisions were mixed on balance but the recent growth spurt has brought the industry’s price-adjusted output to within 7.92 percent of its February, 2020 levels versus the 9.37 percent calculable last month; 

>aerospace and miscellaneous transportation equipment, which produced constant dollar production growth of 1.15 percent. Slightly positive revisions helped the sector push its post-February, 2020 output expansion to 26.37 percent in real terms, versus the 26.29 percent> calculable last month; and

>computer and electronics products, where inflation-production production was 0.53 percent higher in November than in October. Yet decidedly negative revisions helped push this diverse category’s real expansion since February, 2020 down to 5.70 percent, versus the 6.32 percent calculable last month.

The biggest November losers among the great majority of broad manufacturing sub-sectors seeing drooping after-inflation production were:

>automotive, whose volatility has shaped so much of manufacturing’s recent fortunes. November’s constant dollar output sank on month by 2.84 percent, the worst such result since February’s 3.81 percent tumble. Revisions were mixed but inflation-adjusted production of vehicles and parts is now 0.46 percent lower since just before the CCP Virus struck in force, versus being 3.18 percent higher as of last month.

>electrical equipment appliances and components, where output slipped 2.41 percent in November. – another post-April, 2020 worst. In addition, an initially reported October increase of 1.92 percent, which was the best such result since February’s 2.29 percent, was downgraded to 0.68 percent. Other revisions were negative as well, which dragged down this diverse sector’s after-inflation growth since February, 2020 all the way down to 2.83 percent, versus the 7.07 percent calculable last month;

>furniture, which experienced a 2.02 percent real output decrease that represented its worst such result since February, 2021’s 2.77 percent. Revisions were negative overall, and in real output terms the furniture industry is now 7.31 percent smaller than in immediately pre-pandemic-y February, 2020 versus the 4.80 percent calculable last month; and

>plastics and rubber products, whose 1.84 percent price-adjusted output slip was another worst since the 18.63 percent nosedive in peak pandemic-y April, 2020. Along with mixed revisions, the November drop depressed real plastics and rubber products output to 0.66 percent below February, 2020 levels versus having been 1.18 percent above as of last month.

The machinery sector is a major bellwether for the rest of domestic U.S. manufacturing and the entire economy because its products are so widely used. In November, its real output dipped for the first time (by 0.23 percent) since June’s 1.94 percent fall-off. Revisions were slightly negative, and inflation-adjusted production of machinery is now 7.53 percent greater than just before the CCP Virus’ arrival in force in February, 2020, versus 8.31 percent calculable last month.

The shortage-plagued semiconductor industry has also been key to domestic manufacturing’s fortunes, and will be receiving mammoth subsidies soon due to Congress’ passage of legislation aimed at boosting its American footprint. So November’s 0.39 percent real output expansion is good news, especially since it was the first increase since June’s 0.79 percent. Revisions were mixed, leaving constant dollar semiconductor output up 12.40 percent since February, 2020, versus the 12.16 percent calculable last month.

Since the pandemic struck, RealityChek has been paying special attention to several other manufacturing sectors that have either been especially hard hit by the pandemic, or that have been especially important in fighting it. Overall, they experienced downbeat Novembers in terms of production.

The exception was aircraft and parts, whose companies were hit so hard by the CCP Virus-related curbs on travel. In November, these companies boosted their after-inflation output by another 1.85 percent. Moreover, October’s initially reported gain of 2.51 percent was upgraded to one of 2.59 percent (the best such performance since April’s 3.01 percent). Other revisions were negative, but inflation-adjusted output in this sector is now 35.82 percent higher than just prior to the pandemic’s arrival in force, versus the 34.14 percent calculable last month.

The pharmaceutical and medicines industry (including vaccine makers) saw real production down by 0.16 percent, the first decline since June’s 0.50 percent. But revisions were positive enough (especially for October) to bring this sector’s real output 18.11 percent above February, 2020’s levels versus the 16.71 percent calculable last month.

Inflation-adjusted production slid by 1.55 percent after inflation for the medical equipment and supplies firms that turn out so many products used to fight the virus. This drop was another instance of a worst such result since peak pandemic-y April, 2020 (15.08 percent). Revisions were mixed, and real output in these industries is still up 13.23 since just before the pandemic. But as of last month, this figure was 15.75 percent.

It’s of course entirely possible that these dreary November manufacturing output results are blips, and that the sector will keep shrugging off bearish predictions. But with U.S. growth seemingly certain to slow down markedly at the least, and global growth already weak, it’s difficult to understand how domestic industry escapes these undertows.

Following Up: Podcast On-Line of National Radio Interview on Apple’s Exodus from China

08 Thursday Dec 2022

Posted by Alan Tonelson in Following Up

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Apple, CBS Eye on the World with John Batchelor, China, Following Up, friend-shoring, globalization, Gordon G. Chang, manufacturing, offshoring, reshoring, supply chain, Tim Cook, Zero Covid

I’m pleased to announce that the podcast is now on-line of my interview last night on the nationally syndicated “CBS Eye on the World with John Batchelor.” 

Click here for a timely discussion – with co-host Gordon G. Chang – about the possibly sweeping implications for the futures of the U.S. and Chinese economies of Apple’s apparent decision to move more and more production out of the People’s Republic faster and faster.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: Worsening U.S. Trade Deficits are Back for Now

06 Tuesday Dec 2022

Posted by Alan Tonelson in (What's Left of) Our Economy

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Advanced Technology Products, CCP Virus, China, coronavirus, COVID 19, dollar, euro, Europe, exchange rates, exports, goods trade, imports, manufacturing, natural gas, non-oil goods, services trade, Trade, trade deficit, Wuhan virus, Zero Covid, {What's Left of) Our Economy

At least if you don’t factor in inflation, this morning’s official U.S. figures (for October) show that an encouraging recent winning streak for America’s trade flows and their impact on the economy has come to an end for now.

The winning streak consisted of overall monthly trade deficits that shrank sequentially from April through August, which means – according to how Washington and most economists calculate such things – that trade was contributing to the economy’s growth. And that five month stretch was the longest since the shortfall declined for six straight months between June and November, 2019.

Even better, this contribution translated into expansion that was healthier, fueled more by producing and less by borrowing and consuming. Better still, during the last part of this period, the deficit was falling while growth was taking place – as opposed to the more common pattern of a declining deficit limiting contraction mainly because a shriveling economy was buying fewer imports. And better still, for most of these months, the trade gap shrank both because exports climbed and imports dropped.

In October, however, the combined goods and services deficit rose for the second consecutive month, and by 5.44 percent, from an upwardly revised $74.13 billion to $78.16 billion. That total, moreover, was the highest since June’s $80.72 billion. And also for the second straight month – exports dipped and imports advanced.

That consecutive sequential export decrease was the first such stretch since the peak CCP Virus period of March thru May, 2020. The actual decline was 0.73 percent, from an upwardly revised $258.51 billion to $256.63 billion – a total that was the lowest since May’s $256.08 billion

The total import increase was also the second straight, and marked the first back-to-back improvements since January through March of this year (which capped an eight-month period of increases). These foreign purchases advanced by 0.65 percent in October, from an upwardly revised $332.64 billion to $334.79 billion.

Up for the second straight month as well as the goods trade deficit – a development that last happened from November, 2021 through January, 2022. The gap widened by 6.51 percent, from upwardly revised $93.50 billion to $99.59 billion, and this figure was the highest figure since May’s $104.33 billion.

Goods exports fell for the second straight month in October, too – a first since that peak virus period of March through May, 2020. (The streak actually began in February.) The October retreat was 2.06 percent, and brought the total from a downwardly revised $179.69 billion to $175.98 billion – its worst since April’s $176.80 billion

Goods imports grew a second straight month, too, from an upwardly revised $273.19 billion to $275.57 billion. The 0.87 percent increase resulted in the highest monthly level since June’s $282.68 billion.

Services trade, which is dwarfed by goods trade, nonetheless produced some bright spots in the October trade report. The longstanding surplus in this sector, which was so hard hit by the pandemic, improved for the first time in three months, froma downwardly revised $19.37 billion to $21.43. The 10.62 percent increase produced the best monthly total since last December’s $21.66 billion.

Most of this progress stemmed from the ninth consecutive advance and the seventh straight record in services exports. In October, they expanded from an upwardly revised $78.82 billion to $80.65 billlion.

Services imports dipped by 0.38 percent, from an upwardly revised record of $59.45 billion to $59.22 billion.

Manufacturing’s chronic and enormous trade shortfall became more enormous in October, worsening by 4.32 percent, from $129.14 billion to $134.73 billion. That total was the second highest ever, after March’s $142.22 billion.

Manufacturing exports inched down by 0.24 percent, from $110.69 billion to $110.42 billion, while imports surged by 2.07 percent, from $240.10 billion to a second-highest ever $245.17 billion (behind only March’s $256.18 billion).

At $1.2745 trillion (up 18.06 percent from the 2021 level), the year-to-date manufacturing trade deficit is already close to the annual record – last year’s $1.3298 trillion.

By contrast, dictator Xi Jinping’s over-the-top Zero Covid policies no doubt helped depress the also chronic and enormous U.S. goods trade deficit with China by 22.58 percent on month in October. The nosedive was the biggest since the 38.93 percent plummet in February, 2020, when the People’s Republic was locking itself down against the first CCP Virus wave. And the October monthly trade gap was the smallest since August, 2021’s 31.66 percent.

Interestingly, U.S. goods exports to China soared by 31.38 percent on month in October, from $11.95 billion to $15.70 billion. That amount was the highest since last November’s $15.87 billion, and the monthly increase of 31.33 percent was the fastest since October, 2021’s 51.23 percent.

Imports, however, sank by 9.49 percent, from $49.25 billion to $44.57 billion. The level was the lowest since May’s $43.86 billion and the rate of decrease the greatest since April’s 11.82 percent.

Year-to-date, the China goods trade gap has ballooned by 18.68 percent, once again faster than the rise of the U.S. non-oil goods deficit (17.53 percent), its closest global proxy.

In October, for a change, the widening of the overall U.S. trade deficit – and then some – came largely from a booming imbalance with Europe. The goods gap with the continent skyrocketed by 48.51 percent, sequentially, from $15.78 billion to $23.44 billion. That new total was the biggest since March’s $28.50 billion and the rate of increase the fastest since it shot up by 68.37 percent that same month.

U.S. goods exports to Europe actually set a new record in October ($44.27 billion, versus the old mark of $43.61 billion in June). But American global sales of natural gas, which are up 52.51 percent on a year-to-date basis due largely to the continent’s need to replace sanctioned Russian energy supplies, oddly pulled back by 9.90 percent.

At the same time, American goods imports from Europe, surely reflecting a weak euro, leaped by 16.35 percent, from $58.19 billion to $67.71 billion. That total was the second highest on record (trailing only March’s $70 billion) and the monthly increase (16.35 percent) the fastest since March’s 32.43 percent.

October trade in Advanced Technology Products (ATP) set several records, but most were the bad kind. The deficit worsened by 7.70 percent, from $24.32 billion to $26.19 billion, and hit its second straight all-time in the process.

Exports set a new record, rising 4.08 percent on month, from $34.33 billion to $35.73 billion. (The old mark of $34.91 billion dates back to March, 2018.)

Imports also reached their second straight all-time high, climbing 5.58 percent sequentially, frm $58.65 billion to $61.92 billion.

Moreover, year-to-date, the ATP trade shortfall is up 32.17 percent, and at $204.21 billion, it’s already set a new annual record.

Some relief could be in store for America’s trade flows in the coming months. The dollar has weakened in recent weeks, which will restore some price competitiveness for U.S.-origin goods and services at home and abroad. And a recession, a further growth slowdown, and/or continued high inflation could keep reducing imports as well (though that’s the kind of recipe for smaller trade deficits that no one should welcome).

At the same time, solid economic growth could continue, as it has throughout the second half of the year. Americans’ spending power could remain strong, given still huge (though dwindling) amounts of savings amassed during the pandemic. At the behest of U.S. allies, President Biden seems likely to weaken the Buy American provisions governing the green energy production incentives in the Inflation Reduction Act. And China’s export machine could revive as Beijing decides to back away from economically crippling levels of lockdowns.

At this point, however, I’m thinking that recent deficit improvement will keep “rolling over” as Wall Streeters call a steady reversal of investment gains. It’s not much more than a gut feeling. But my hunches aren’t always wrong.

Following Up: Podcast Now On-Line of Interview on Apple’s Souring Romance with China

04 Sunday Dec 2022

Posted by Alan Tonelson in Following Up

≈ Leave a comment

Tags

Apple, China, decoupling, Following Up, global supply chains, John Batchelor, manufacturing, supply chain

I’m pleased to announce that the podcast of my interview last night on the nationally syndicated radio host John Batchelor’s podcast is now on-line.

Click here for a timely discussion about the possibly sweeping implications for the futures of the U.S. and Chinese economies of Apple’s reported decision to speed up its efforts to move production out of the People’s Republic.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

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So Much Nonsense Out There, So Little Time....

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So Much Nonsense Out There, So Little Time....

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So Much Nonsense Out There, So Little Time....

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So Much Nonsense Out There, So Little Time....

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So Much Nonsense Out There, So Little Time....

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