ShareThis Page

Except for U.S., global picture rosy for manufacturing

| Tuesday, Dec. 4, 2012, 12:01 a.m.

WASHINGTON — Just a few months ago, the global economy seemed to be stuck in a precarious state. Huge swaths of the world economy were either slowing down or contracting outright, and it wasn't at all clear whether global economic policymakers would have enough gas left in their stimulus tanks to stop things from spiraling into a bad place.

But a wave of reports on the manufacturing sector in nations around the world overnight and Monday morning are just the latest data that point to the world having avoided that fate. The same cannot be said of the United States, however.

China's manufacturing sector expanded in November, with an official manufacturing index rising to 50.6 from 50.2 and an unofficial index from HSBC rising to 50.5, from 49.5. (In those numbers, like all of those cited here, numbers above 50 indicate expansion and the indexes are based on surveys of purchasing managers at manufacturing firms). Other emerging Asian economies also reported increases, including South Korea, India, and Vietnam.

In Europe, the news was also positive, although positive is a relative concept on a continent where many nations are in recession and a few are in depression. For the 17-nation eurozone as a whole, the manufacturing index rose to 46.8 from 45.7, signaling that the contraction continued but is becoming less severe. Manufacturing indexes from Markit Economics rose in the continent's industrial powerhouses of Germany and France, and perhaps most promisingly Spain, land of more than 25 percent unemployment, the index jumped to 45.3, from 43.5.

Italy was the only disappointment among the large European economies, edging down. Other countries with negative results in their manufacturing indexes include Japan, Indonesia and Russia.

But put it all together, and the portrait painted by the manufacturing reports is of a world economy that isn't going off the rails. China's slowdown over the summer was not, so far at least, the start of any broader economic collapse. Europe's recession is bad, but major European economies aren't in free-fall. Mario Draghi, president of the European Central Bank, said in an interview with Europe 1 radio on Friday that a Eurozone recovery “would start probably in the second half of 2013,” and the new numbers on Monday seem to fit that forecast; contraction remains under way, but the pace of that contraction is slowing.

This is all good news. One of the major weights that has hung on U.S. companies over the last few months has been a slowing global economy; American exporters have dealt with less actual demand from overseas and with fear that the slump could become an all-out global recession.

The first of those factors remains. While the latest wave of manufacturing numbers represent improvement, they still signal an economic contraction in Europe and weaker growth in emerging Asian economies than everyone had become accustomed to during the last few years.

But it is that second risk that is increasingly off the table. This is a run-of-the-mill recession in Europe, not an all-out economic collapse. The weakness in China and other emerging Asian economies is more a soft patch than an end to two decades of rip-roaring growth.

All of which brings us to the United States. The Institute for Supply Management's purchasing managers' index fell sharply, to 49.5, from 51.7 in October. The details of the number were simply terrible. The level of production activity at American factories rose, but new orders fell 3.9 percent, which bodes ill for the future. The employment component of the survey fell to its lowest level since September 2009, which is hardly an optimistic sign for the November jobs numbers due out on Friday.

For the last several months, U.S. firms have blamed economic weakness abroad for their own hard times. But the combination of improving manufacturing numbers around the world and weakness in America suggests that this is no longer a global story. We have to look inward-particularly to the uncertainty around the resolution of the fiscal cliff to explain what is happening in the U.S. economy.

“The fiscal cliff is the big worry right now,” said an unnamed executive of a fabricated metal products company quoted by the ISM in its release. “We will not look toward any type of expansion until this is addressed; if the program that is put in place is more taxes and big spending cuts — which will push us toward recession — forget it.”

TribLIVE commenting policy

You are solely responsible for your comments and by using you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.