Here is the summary for this month’s Global Manufacturing Economic Update:

While much of the focus of late has been on the fiscal cliff, manufacturers have also been worried about slowing global sales. Business leaders have said that increasing their exports has been a struggle. Yet, despite these headwinds, year-to-date growth in U.S.-manufactured goods has risen almost 5 percent. The good news is that this figure represents positive growth, but it also shows significant easing from the same time period last year. Much of the deceleration in exports corresponded with challenging economic environments in a number of countries, going beyond Europe’s struggles to include Brazil, China, Japan and elsewhere.

The latest data indicate that the global economy appears to be strengthening, which should bode well for improving international trade this year. Europe and Japan are exceptions as both continue to experience significant weaknesses in their respective markets. The purchasing managers’ indices (PMIs) for both remain negative, with new orders, production and employment contracting. Political and economic uncertainties permeate these data, with manufacturers uncertain about what  the future holds. Elsewhere, the trends are more positive. Seven of the top 10 markets for U.S.-manufactured goods have economies that are growing—a definite improvement from three months ago when just four of them did. As a result, we are seeing pickups in manufacturing activity and business confidence. This does not mean that these economies are growing strongly, but it does suggest that global trends have stabilized and are moving in the right direction.

Ironically, the political battles over U.S. fiscal policy had implications beyond our borders, with concerns about a possible economic downturn a top concern among our trading partners. This was especially the case for Canada, our largest trading partner, but other nations fretted about our fiscal situation, as well. With a deal to avert the fiscal cliff, at least some of these anxieties will go away for now. However, there are still larger concerns about the long-term fiscal health of the United States, and possible battles over raising the debt ceiling will keep these issues front and center. Nonetheless, the United States is now poised for modest growth in 2013, with rising exports a major contributor both to our macroeconomic picture and to manufacturers’ business plans.

Next week, we will receive data on November’s U.S. trade balance. The previous month saw a widening of the trade deficit, with both exports and imports lower. Hopefully, a slowly improving global economy will help to turn that around. Globally, we will get the latest industrial production and retail sales data from a number of European countries, with the European Central Bank meeting to discuss its monetary policy plans for the first time in 2013. Trade data will also be released for China, as well as indices for consumer and producer prices. The larger number to watch from the Chinese perspective will be real GDP growth, which will be out on Wednesday, January 16, and is expected to show an increase of 7.7 percent.

Chad Moutray is the chief economist, National Association of Manufacturers.

Below is the summary from this week’s Monday Economic Report:

The Federal Reserve noted the U.S. economy has seen some modest improvements during the past month, with a number of indicators highlighting this progress. Hurricane Sandy had an impact, both in slowing down activity in October and increasing it in November in its aftermath. Industrial production rose 1.1 percent in November, recovering from October’s 0.7 percent decline, with repairs from the storm possibly explaining at least some of these gains. Similarly, retail sales also rebounded for the month, led by strong auto sales and spending on appliances, building materials, furnishings and clothing. Lower petroleum costs also helped to ease Americans’ pocketbooks, with gasoline station sales down 4 percent in November on lower prices.

Despite the optimistic news on production and sales, major headwinds confront businesses and consumers. Manufacturing production remains 0.6 percent below July’s levels, a reflection of the weaker economic environment during the past few months. These headwinds mostly stem from uncertainties related to the fiscal cliff and the impact of a slowing global economy on international orders. The trade balance widened in October on reduced exports and imports. While year-to-date manufactured goods exports are higher than last year, they reflect significant easing in trade volumes, resulting from a weakened economic environment among our major trading partners. Meanwhile, in the United States, small business owner confidence plummeted last month on worries about the political environment and diminished expectations for sales, earnings, inventories and capital spending.

High unemployment rates and challenges to the U.S. and global economies are persistent worries for the Federal Reserve Board. The Federal Open Market Committee (FOMC) voted to purchase $85 billion in mortgage-backed and long-term securities each month in an effort to push down long-term interest rates and stimulate economic growth. Moreover, it will continue to do so until the unemployment rate hits 6.5 percent or forecasted inflation exceeds 2.5 percent. These economic indicator targets replace earlier language about maintaining these policies through mid-2015. Still, in practicality, the Fed does not expect the unemployment rate to reach 6.5 percent until 2015, according to its forecasts, suggesting that it will continue to pursue these policies for the foreseeable future.

The fact that inflation remains in-check, at least for now, facilitates the Fed’s willingness and ability to stimulate growth. Consumer and producer pricing data released last week back this up, with lower energy costs helping to ease cost pressures. Core consumer prices have risen 1.8 percent over the past 12 months, and manufacturing raw material costs—down 1.2 percent in November—have risen just 1.0 percent year-over-year. These rates are significantly lower than earlier in the year.

This week, we will learn more about regional manufacturing activity and housing. Surveys from the Kansas City, New York and Philadelphia Federal Reserve Banks—which all indicated a contraction last month—will likely show the sector continuing to struggle. Housing starts data, on the other hand, should continue to illustrate strength in the residential construction sector. Other highlights for the week include data on leading indicators, a second revision to GDP and personal spending.

Note: Due to the holidays, the next report will be released on Wednesday, December 26. There will be no report issued during the week of December 31. The schedule will resume on Monday, January 7, 2013.

Chad Moutray is the chief economist, National Association of Manufacturers.

In advance of last week’s meeting of the President’s Export Council (PEC), President Obama issued Executive Order 13630 to establish an interagency task force on commercial advocacy to help U.S. exporters get better access to commercial diplomacy, financing, market intelligence, business leads and technical assistance.

The Commerce Department’s Advocacy Center, which promotes U.S. companies bidding on projects for foreign governments and foreign government-owned corporations, will lead the task force. Currently, 15 federal agencies play a role in export promotion and trade policy. The Advocacy Center last year helped U.S. firms win about $87 billion in contracts. The new Task Force is part of broader efforts under the President’s National Export Initiative (NEI), which has the goal of doubling U.S. exports by 2015. The Commerce Department also released a Fact Sheet with more details.

The Executive Order laid out several objectives for the Task Force:

Review and prioritize already approved commercial advocacy cases, and coordinate the activities of relevant agencies to enhance federal support for those cases, to better help U.S. exporters competing for foreign procurements;

• Increase the number of senior-level agency officials regularly and effectively advocating on behalf of U.S. exporters by coordinating the engagement of agency leadership with their foreign counterparts regarding commercial advocacy issues, particularly during foreign travel and other occasions for engagement with foreign officials;
• Increase the number of U.S. businesses utilizing commercial advocacy services by developing strategies to raise the awareness of commercial advocacy assistance within the U.S. business community;
• Expand awareness of opportunities for U.S. businesses to sell their goods and services to foreign governments;
• Facilitate voluntary short-term personnel exchanges between the Commerce Department and other Task Force agencies, to cross-train federal personnel to better serve U.S. exporters.

The Task Force is also required to submit a progress report to the Export Promotion Cabinet every six months detailing the number of commercial advocacy cases opened and successfully concluded, the number of commercial advocacy engagements by senior-level agency officials, and the number of U.S. businesses utilizing commercial advocacy services.

The NAM has long been supportive of the NEI and other federal export promotion efforts, highlighting exports as part of “A Manufacturing Renaissance” and offering a “Blueprint to Double Exports in Five Years.”  The NAM has also partnered with the U.S. and Foreign Commercial Service to help manufacturers expand their export sales through the New Market Export Initiative (NMEI). Through the NMEI, the NAM will work with manufacturers to find new markets for your U.S. manufactured products.

Lauren Airey is director of trade facilitation policy, National Association of Manufacturers.

Today marks the last and final scoping meeting in Seattle for the proposed coal export terminals in the Northwest. It is an important chance for community members to stand up for this project before federal and state agencies determine its future.  The meeting will take place at the Washington State Convention Center, Ballroom 6F between 4-7 PM (PST) today.

In Washington State, residents face an 8.5 percent unemployment rate with some of the hardest hit sectors being the local shipping, and construction industries. Residents in the Northwest know they need new jobs opportunities – that is why the Alliance for Northwest Jobs and Exports  is fighting to approve five proposed coal export terminals in the Northwest.

These projects would create thousands of new jobs and generate millions in local tax revenues, adding much-needed funds to state and local budgets for schools and other vital services like emergency responders. This doesn’t include local income tax revenues and other benefits of getting thousands of people back to work in well-paying jobs.

Most Washingtonians are in support of these projects. A public opinion poll released last month by the Brotherhood Locomotive Engineers and Trainmen, the United Transportation Union, the Oregon State Building, and Construction Trades Council showed that local residents support the planned export terminal by 2 to 1 margin. These results mirror the poll findings from July by Oregon Public Broadcasting (OPB) that also showed 2 to 1 support for the terminals. (continue reading…)

Markit reports an uptick in activity, with its Flash U.S. Manufacturing Purchasing Managers’ Index (PMI) increasing from 51.0 in October to 52.4 in November. The data show that the sector has seen improvements in the past month across-the-board. The index for new orders, for instance, rose from 51.1 to 52.8. More importantly, new export orders – which have been in contraction territory for several months – also made progress, up from 47.2 to 49.9. This suggests some stability in the international sales, with November’s reading near neutral (e.g., a near equal number of respondents said that export sales were increasing as decreasing).

Output, employment, and raw material inventories also improved. The employment index strengthened from 51.8 to 52.6, its highest point since July. Given recent hesitancies to hire, this is certainly good news. The one downside was that input prices picked up their pace and remained highly elevated, with the index growing from 57.1 to 63.6. This indicates increased pricing pressures for many manufacturers.

Chris Williamson, Markit’s Chief Economist, said, “This is an encouraging sign that the slowdown in the goods-producing sector may have bottomed-out. Manufacturing therefore looks likely to make a positive contribution to economic growth in the fourth quarter after acting as a slight drag in the third quarter. The survey is consistent with manufacturing output growing at an annualised rate of just over 1.0% in November.”

Tomorrow, Markit will release new Flash PMI data for both the Eurozone and China markets. Last month’s reports showed Europe’s woes deepening; whereas, China’s economy made some progress, albeit will continued weaknesses.

Chad Moutray is the chief economist, National Association of Manufacturers.

Below is the summary from this week’s Monday Economic Report:

Before we could fully process the outcome of last week’s election, policymakers and financial markets began to focus immediately on the looming fiscal cliff. The Dow Jones Industrial Average fell over three percent between its closes on Tuesday and Friday, and the Congressional Budget Office reiterated its forecast that the United States would fall back into a recession if lawmakers fail to avert the fiscal cliff. For their part, both President Obama and Speaker of the House John Boehner (R-OH) spoke of a possible compromise post-election, with Speaker Boehner open to “new revenues” stemming from tax reform and the President eager to work with Congress while also restating his desire for a “balanced approach” to reducing the deficit. Manufacturers will be watching these developments closely, as the uncertain business and political environment has dampened economic growth of late. For example, the number of manufacturing job postings in September fell for the fourth straight month.

Economic challenges are not limited to the United States, with European woes once again coming into focus. September’s industrial production figures released last week were lower in Spain (down 7.0 percent), France (down 2.7 percent), Germany (down 1.8 percent), the United Kingdom (down 1.8 percent) and Italy (down 1.5 percent). Other data also indicate that economic activity in the Eurozone deteriorated, with higher unemployment, a contracting Purchasing Managers’ Index (PMI) and lower retail sales. Eurozone GDP figures will be released on Thursday and are expected to be down roughly 0.3 percent.

Despite significant headwinds in the United States and Europe, manufacturers increased exports in September. Goods exports rose to $134.0 billion—an all-time high—and the overall trade deficit narrowed to $41.5 billion. The gain stemmed from both petroleum and nonpetroleum exports, with many regions around the world increasing trade. (Exports to Europe were flat for the month.) Manufactured goods exports rose 6.1 percent year-over-year. Recent progress on the trade front can be attributed to some improvements (even among definite weaknesses) globally. For instance, industrial production in China edged higher (up 9.6 percent year-over-year), its highest level since May. This follows better (but still contracting) PMI data out earlier in the month.

New U.S. industrial production data on Friday should show modest growth for the second month in a row. In addition, regional manufacturing surveys from the New York and Philadelphia Federal Reserve Banks will be released on Thursday. Both improved in October, although the Empire State survey still contracted. It will be interesting to see if the data reflect continued gains. Other highlights for this week include consumer and producer prices, retail sales and small business optimism.

Chad Moutray is the chief economist at the National Association of Manufacturers.

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit narrowed from $43.8 billion in August to $41.5 billion in September. The improvement stemmed from growth in both goods exports, which rose from $128.7 billion to $134.0 billion, a new record high.

Goods imports were also higher, up from $187.5 billion to $191.5 billion. This suggests a higher level of trade activity in September – something that has been on-again, off-again throughout the year, particularly given global economic weaknesses.

Even with worldwide economic headwinds the September figures reflect stronger growth following significantly slower August data. The increase in goods exports was split between petroleum and non-petroleum sources. Petroleum exports were higher, up from $9.0 billion to $11.2 billion; meanwhile, non-petroleum exports rose from $118.2 billion to $121.4 billion. The petroleum trade balance shrunk to $21.7 billion from $23.5 billion. The non-petroleum goods trade balance widened from $34.9 billion to $35.2 billion, mostly on higher imports.

More specifically, total goods exports were higher for the month in the following categories: industrial supplies and materials (up $3.4 billion); foods, feeds, and beverages (up $1.1 billion); consumer goods (up $487 million); and capital goods, except automotive (up $432 million). The only major category to see declining exports was motor vehicles and parts, which was down by $289 million.

These were the same groupings which also experienced increased goods imports. The largest increase in goods imports came from consumer goods (up $2.7 billion). The following sectors also seeing gains: industrial supplies and materials (up $1.2 billion); capital goods, except automotive (up $586 million); and foods, feeds, and beverages (up $92 million). Automotive imports declined by $854 million.

Looking at data which is not seasonally adjusted, manufactured goods exports continue to be higher year-to-date this year than last. Year-to-date manufactured goods total $765.7 billion, or 6.1 percent higher than over the same time period in 2011.

On a country-by-country basis, there were monthly export gains seen in the South and Central America (up $648 million, not seasonally adjusted), Africa (up $518 million), OPEC nations (up $384 million), and Pacific Rim (up $339 million). Chinese goods exports rose from $8.6 billion to $8.8 billion. European Union goods exports ($21.3 billion) were essentially flat for the month, up by just $8 million. Within Europe, though, there were some positives, with higher exports made to Germany, Italy, and the United Kingdom. Weaker exports to Europe were observed going to Belgium, France, the Netherlands, and Spain.

The narrowing of the trade balance is positive news, particularly as it is a sign that manufacturers are selling more of their goods overseas. However, these numbers continue to be choppy with the goods trade balance up and down throughout the year. Nonetheless, the larger trend has been for the goods trade balance to narrow, improving from a $66.8 billion deficit in January to $57.5 billion in September. Higher year-to-date export growth is even more impressive given the challenges seen worldwide, with slowing global growth clearly dampening potential activity.

Chad Moutray is chief economist, National Association of Manufacturers.

This afternoon, the NAM and the Nuclear Energy Institute (NEI) co-hosted a press event to release a study comparing the nuclear export control regimes of the United States and four other leading nuclear supplier countries. Prepared by Pillsbury Winthrop Shaw Pittman LLP, the comparative study shows that the U.S. licensing regime for commercial nuclear exports is (1) more complex and difficult to navigate, (2) more restrictive, and (3) significantly less efficient than the counterpart regimes of Russia, France, Korea and Japan. 

The study concludes that these greater burdens on U.S. commercial nuclear exporters impose a competitive disadvantage against their international competitors.

At the NAM, we believe our country has the tools to bring about a manufacturing renaissance. We just need the right policies to make it happen.

With 68 nuclear reactors currently under construction worldwide and another 160 ordered or planned, manufacturers in the U.S. are racing to be the suppliers of the world’s nuclear energy needs—but they can’t win the race if their shoes are tied together.  We’re happy to partner with NEI on today’s study and hope this is the first step toward easing many of the regulatory barriers that impact the domestic nuclear energy industry’s competitiveness. 

You can learn more about the press conference and the study at NEI’s website here.

Ross Eisenberg is vice president of energy and resources policy, National Association of Manufacturers.

The EU-U.S. High Level Working Group on Jobs and Growth is expected to release its final report before the end of this year, and the NAM hopes that it will make bold recommendations to the leaders of both economies on how we can remove both tariff and non-tariff barriers to trade and increase the movement of goods and services across the Atlantic. The NAM has been a leading business advocate in urging the United States and EU to launch comprehensive free trade agreement negotiations aimed at fostering mutual economic benefits and job creation.

The United States and the EU already have the world’s largest commercial relationship but major opportunities for increased trade, investment and cooperation remain. A trade-liberalizing Transatlantic Partnership Agreement (TAP) could demonstrate the strong leadership of the United States and the EU to the rest of the world and put both our economies in a stronger position in the global marketplace.

A key objective for the NAM in a TAP negotiation is promoting regulatory cooperation and coordination in order to remove regulatory barriers to trade and reduce unnecessary divergence between EU and U.S. regulations. Such barriers not only limit market access on both sides of the Atlantic and limit consumer choice, they substantially increase costs for U.S. and EU manufacturers, undermining their global competitiveness. To address these barriers, it is vital that U.S. and EU negotiators seek to address both existing regulatory differences and the processes for developing new regulations. With respect to existing standards, a TAP agreement should harmonize or eliminate duplicative and redundant technical regulations, standards and conformity assessment procedures.

We recognize that the EU and the United States have attempted to address these issues previously and have encountered significant challenges. It is vital that we continue working together to identify ways of harmonizing standards, regulations and requirements in order to improve efficiency and remove barriers to trade. The benefits of an ambitious, commercially meaningful, and successful TAP negotiation would be substantial for manufacturers.

Jessica Lemos is director of international trade policy, National Association of Manufacturers.

The Senate Finance Committee has unanimously approved a bill to establish PNTR with Russia. Prior to the mark-up, Chairman Max Baucus (D-MT) introduced a Modified Chairman’s Mark to S. 3285. The bill was approved with one amendment, offered by Senator Jon Kyl (R-AZ), that creates a hotline for reporting corruption.

Senator John Cornyn (R-TX) offered an amendment that would delay the effective date for PNTR until the President certifies the Russian government has stopped shipping arms to Syria, and the amendment failed 16-8. Full details for the mark-up are online, along with statements from Senator Baucus and Ranking Member Orrin Hatch (R-UT).

On the House side, Ways & Means Committee Chairman Dave Camp (R-MI) released the following statement after the Senate Finance Committee vote:

“I welcome the news that the Finance Committee was able to pass bipartisan Russia PNTR legislation today and will carefully study the bill once legislative text is available. I intend to have a bill introduced in the next few days and look forward to moving this important jobs bill through the committee on a bipartisan basis as soon as possible. I continue to work with the White House to find a Democratic cosponsor.” 

The NAM sent a letter to Chairman Baucus and Ranking Member Hatch yesterday in support of the PNTR legislation. With a short window before the August recess, the NAM will continue to advocate for swift action on PNTR with Russia.

Russia’s upper house of parliament also voted on Wednesday to ratify entry into the World Trade Organisation (WTO). Russia will officially become a WTO member 30 days after Russian President Vladimir Putin signs the bill.

Lauren Airey is director of trade facilitation policy, National Association of Manufacturers.