Just when you think you’ve got a decent handle on the wealth of manufacturing-related economic data out there, lots more suddenly comes into focus. So right after this morning’s post on China’s export subsidies, a Twitter friend brought to my attention a New York Times piece on Beijing’s plans to strengthen its homegrown semiconductor industry with resources dwarfing those being spent on trade-related credits.
According to reporter Paul Mozur, (in turn quoting a non-Chinese private sector study), China intends to allocate $170 billion over the next five to ten years to ensure that it moves into world leadership ranks in semiconductor production. Another account of the Chinese program, part of its new Five-Year Plan, reveals that one of Beijing’s priorities is to enter the business of producing the kinds of advanced microprocessors that have long been one of Intel’s mainstays.
Almost on cue came news of an Obama administration announcement of new initiatives to help preserve and improve America’s global standing in advanced manufacturing. Money of course isn’t the only or even the best predictor of how effective these measures will be, and arguably, it will cost less to keep the United States at the manufacturing cutting edge than to bring China closer to it. But it’s at the least interesting that the sums allotted by the White House – $530 million overall – are absolutely dwarfed by the scale of China’s efforts.
Meanwhile, it’s clear that I need to start tracking two more regular sources of manufacturing statistics – the American machine tool industry’s monthly reports on orders in that key sector, and the global steel industry’s figures on output in that segment. Their latest updates have come out in the last two weeks, and neither is looking remotely renaissance-y.
On October 14, the Association for Manufacturing Technologies (AMT) pegged August U.S. orders of machine tools and related products art just under $357 million. That was up less than one percent over August and fully six percent lower than last August’s levels. For the first eight months of this year, orders for these goods were running 2.4 percent behind comparable 2013 levels.
It’s important to note that these AMT figures cover both domestically produced equipment and imports. But since machine tools are so widely used in manufacturing across the board, the numbers are a valuable gauge of the vigor of the domestic manufacturing sector overall.
The steel data released October 27 by the World Steel Association are useful because they report on the production figures for all major steel-making countries. Of special interest: Worldwide steel output (measured by tonnage, not value) held steady in September on a month-to-month and year-on-year. But the U.S. figures? Down 6.1 percent from August, and up only 1.6 percent on a January-through-September basis. And this even though the U.S. Economy has been gaining momentum versus most of the rest of the world, and though the American motor vehicle industry – a major steel user – is still on an impressive tear.
Even weirder: China keeps saying it recognizes it has a huge steel overcapacity problem. But production in the world’s leading steel-maker declined only about two percent from August to September, and is actually up 2.3 percent a January-through-September basis.
Tomorrow we’ll get the advance look at U.S. durable goods manufacturing orders, and all week long, I’ll be tweeting on the new monthly manufacturing surveys from regional branches of the Federal Reserve. Let’s not forget, moreover, the Fed’s upcoming statement on Wednesday on interest rates and the fate of its quantitative easing program, along with the first (of three!) readings on the third quarter’s gross domestic product that comes out Thursday morning. Stay tuned!